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, 2002

                             Commission File Number
                                    000-28037

                            FIRST SOUTH BANCORP, INC.
                            -------------------------
        (Exact Name of Small Business Issuer as specified in its charter)



     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)

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

                           COMMON STOCK, NO PAR VALUE

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


State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practical date:  Common Stock, no par value,  920,780
shares outstanding on March 31, 2002.

Transitional Small Business Disclosure Format (Check One)  YES  [ ]  N0 [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 Financial 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,
                                                                                                        2002                 2001
                                                                                                        ----                 ----
Assets
<S>                                                                                                  <C>                  <C>
Cash & due from banks ....................................................................           $   2,222            $   3,039
Due from banks - interest bearing ........................................................              15,500                3,400
 Investment securities:
         Securities held to maturity .....................................................               1,950                1,350
         Securities available for sale ...................................................              10,131                8,901
Loans ....................................................................................             134,461              126,166
      Less, allowance for loan losses ....................................................              (1,485)              (1,450)
                                                                                                     ---------            ---------
Loans - net ..............................................................................             132,976              124,716
Property & equipment, net ................................................................               2,827                2,876
Other assets .............................................................................               2,349                2,328
                                                                                                     ---------            ---------
Total assets .............................................................................           $ 167,955              146,610

Liabilities
Deposits:
      Noninterest-bearing ................................................................           $  10,804            $   9,731
      Interest-bearing ...................................................................             125,950              107,552
                                                                                                     ---------            ---------
                  Total deposits .........................................................             136,754              117,283

Securities sold under repurchase agreements ..............................................               6,360                5,209
Other borrowed funds .....................................................................              10,000               10,000
Demand notes issued to the U.S. Treasury .................................................                 460                   41
Other liabilities ........................................................................               1,192                1,168
                                                                                                     ---------            ---------
                  Total liabilities ......................................................             154,766              133,701

Shareholders' equity
Common stock - no par value; 20,000,000 authorized, ......................................               4,604                4,589
Outstanding 920,780, and 917,780, respectively
Additional paid-in capital ...............................................................               6,541                6,508
Undivided profits ........................................................................               2,039                1,702
Accumulated other comprehensive income/(loss) ............................................                   5                  110
                                                                                                     ---------            ---------
         Total shareholders' equity ......................................................              13,189               12,909

         Total liabilities and shareholders' equity                                                   $167,955             $146,610
                                                                                                     =========            =========
</Table>

                                       3
<Page>


                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                             Statement of Operations

<Table>
<Caption>
                                                                                                              (Unaudited)
                                                                                                     Three Months ended March 31,
                                                                                                     ----------------------------
                                                                                                      2002                  2001
                                                                                                      ----                  ----
                                                                                            (Dollars in thousands, except per share)
Interest income
<S>                                                                                                <C>                      <C>
         Loans, including fees ...................................................                 $ 2,165                  $ 2,145
         Investment securities ...................................................                     151                      265
         Interest bearing deposits ...............................................                      34                       43
         Federal funds sold ......................................................                       0                        1
                                                                                                   -------                  -------

         Total interest income ...................................................                   2,350                    2,454

Interest expense
         Deposits and borrowings .................................................                   1,126                    1,355

Net interest income ..............................................................                   1,224                    1,099
         Provision for loan losses ...............................................                    (110)                     (55)
                                                                                                   -------                  -------
Net interest income after provision ..............................................                   1,114                    1,044

Other income
         Service charges on deposit accounts .....................................                      60                       45
         Other income ............................................................                     250                       42
                                                                                                   -------                  -------
         Total noninterest income ................................................                     310                       87

Other expenses
         Salaries and benefits ...................................................                     595                      493
         Occupancy and equipment .................................................                     125                      118
         Other expense ...........................................................                     195                      182
                                                                                                   -------                  -------
         Total other expense .....................................................                     915                      793

Income before income taxes .......................................................                     509                      338
         Provision for income taxes ..............................................                     172                       98
                                                                                                   -------                  -------

Net income .......................................................................                 $   337                  $   240

         Basic per share earnings ................................................                 $   .37                  $   .26
</Table>




                                       4
<Page>

                     FIRST SOUTH BANCORP, INC.AND SUBSIDIARY

                 Consolidated Statement of Comprehensive Income


                                                              (Unaudited)
                                                     Three Months Ended March 31
                                                     ---------------------------
                                                           2002             2001
                                                           ----             ----


Net Income ...........................................    $ 337           $ 240

Other comprehensive income (loss):

Change in unrealized holdings gains &
    losses on available for sale securities ..........     (169)            107

Income tax (expense) benefit on other
                comprehensive income (loss) ..........       64             (40)
                                                          -----           -----
Total other comprehensive income (loss) ..............     (105)             67

Comprehensive income .................................    $ 280           $ 307
                                                          =====           =====



















                                       5
<Page>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statement of Cash Flows
               For the Three Months ended March 31, 2002 and 2001

<Table>
<Caption>
                                                                                                                  (Unaudited)
                                                                                                       Three Months Ended  March 31,
                                                                                                           2002               2001
                                                                                                           ----               ----
                                                                                                           (Dollars in thousands)
Operating Activities
<S>                                                                                                    <C>                 <C>
Net income .................................................................................           $    337            $    240

Adjustments to reconcile net income to net cash
                    provided by operating activities
         Provision for loan losses .........................................................                110                  55
         Depreciation ......................................................................                 48                  54
         Director fees .....................................................................                 16                  15
         Increase in other assets ..........................................................                (21)                (35)
         Increase (decrease) in accrued expenses and other liabilities .....................                 25                (353)

Net cash provided (used) by operating activities ...........................................                515                 (24)


Investing Activities
         Purchase of securities available for sale .........................................             (5,000)             (4,001)
         Purchase of securities held for investment ........................................                  0                   0
         Purchase of restricted FHLB stock .................................................                  0                (336)
         Proceeds from maturity of available for sale securities ...........................              3,000               3,000
         Proceeds from call of held to maturity securities .................................                  0               1,000
         Origination of loans, net of principal collected ..................................             (8,295)             (6,636)
         Purchase of premises and equipment ................................................                (27)                (19)

Net cash used in investing activities ......................................................            (10,322)             (6,992)

Financing Activities
         Net increase(decrease) in deposits ................................................             19,472              (7,101)
         Net increase in retail repurchase agreements ......................................              1,151                 190
         Net increase in other borrowings ..................................................                419              10,000
         Proceeds from exercise of stock options ...........................................                 48                   0
Net cash provided by financing activities ..................................................             21,090               3,089

Net increase (decrease) in cash and cash equivalents .......................................             11,283              (3,927)

Cash and cash equivalents, beginning .......................................................              6,439              10,897

Cash and cash equivalents, ending ..........................................................             17,722               6,970
</Table>




                                       6
<Page>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                  Statement of Changes in Shareholders' Equity
       Year-ended December 31, 2001 and Three Months Ended March 31, 2002
                                   (Unaudited)
<Table>
<Caption>
                                                                                                       ACCUMULATED
                                                  SHARES OF                          ACCUMULATED          OTHER            TOTAL
                                                   COMMON           PAID-IN            EARNINGS       COMPREHENSIVE    STOCKHOLDERS'
                                                    STOCK           CAPITAL            (DEFICIT)      INCOME/(LOSS)        EQUITY
                                                    -----           -------            ---------      -------------        ------
<S>                                                 <C>            <C>                  <C>              <C>              <C>
Balance at
December 31, 2000 .......................           917,180        11,096,989           795,941            (2,986)        11,889,944


Net income ..............................                                               905,845

Net change in
unrealized gain on
available for sale
securities, net of tax ..................                                                                 113,174

Comprehensive income ....................                                                                                  1,019,009
                                                 ----------        ----------        ----------        ----------         ----------
Balance at
December 31, 2001 .......................           917,780        11,096,989         1,701,776           110,188         12,908,953
</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, 2001 .......................           917,780         11,096,989         1,701,776           110,188        12,908,953

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

Net income ..............................                                                336,876

Net change in
unrealized gain on
available for sale
securities, net of tax ..................                                                                 (105,048)

Comprehensive income ....................                                                                                    231,828
                                                 ----------         ----------        ----------        ----------        ----------
Balance at
March 31, 2002 ..........................           920,780         11,144,989         2,038,652             5,140        13,188,781
</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, 2002 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended December 31, 2002. For further information,  please refer to the financial
statements  and  footnotes  thereto  for the  Corporation's  fiscal  year  ended
December 31, 2001, 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 of Financial Results of Operations

Forward Looking Statements

Statements  included  in  Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results of  Operations  which are not  historical  in nature are
intended to be, and are hereby  identified as "forward  looking  statements" for
the  purpose  of the safe  harbor  provided  by  Section  21E of the  Securities
Exchange Act of 1934, as amended.  Words such as "expect,"  "estimate,"  "plan,"
"anticipate," "believe" and similar expressions are intended to identify forward
looking  statements.  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, 2002 COMPARED TO THE
SAME PERIOD ENDED MARCH 31, 2001.

Net Income

For the first three  months of 2002,  First  South  Bancorp,  Inc.  earned a net
profit  of  approximately  $337  thousand,  or $  .37  per  share,  compared  to
approximately  $240 thousand,  or $ .26 per share,  for the same period in 2001.
This 40 %  increase  in net  income  occurred  despite  (i) a 15 %  increase  in
noninterest expense from $793 thousand to $915 thousand, and (ii) an increase in
the provision  for loan losses  related to loan growth from $55 thousand to $110
thousand.  With the effective tax rate for 2002  approximately  that of the same
period in 2001,  improved  earnings resulted from both increases in non-interest
income  and  net  interest  income.  Compared  to the  first  quarter  of  2001,
non-interest income increased by 257 %, from $87 thousand to $310 thousand,  and
net interest income increased by 11 %, from $1.099 million to $1.224 million.

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 .88 % and 10.43 %, respectively.


                                       9
<Page>

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

                                                            2002           2001
                                                            ----           ----
Return on Average Assets .........................           .88%           .86%

Return on Average Equity .........................         10.43%          8.06%

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

Average Stockholders Equity
as a Percentage of Average Assets ................          8.40%         10.71%

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.  As was stated earlier,  net
interest  income for the first three months of 2002  increased  over that of the
same  period  in 2001 by $125  thousand,  or  11.4 %. As in  most,  if not  all,
instances of comparing the net interest income performance between two different
time periods, a number of factors combined to produce the change in net interest
income which First South  Bancorp  experienced  during the first three months of
2002.

Though growth in total earning assets of $42.8 million, or 40.2 %, was certainly
the most  significant  factor in the area of interest  income  performance,  the
change  in the  earning  assets  mix also  played a major  role in the  yield on
earning  assets.  The segment of total earning assets with the highest  interest
yield,  loans,  increased as a percentage of total earning assets from 81.3 % in
2001 to 87.5 % in 2002.  However,  these positive  influences on interest income
were not  sufficient  to offset the  effect on  interest  income of an  economic
environment of rapidly declining  interest rates.  Total interest income for the
first  quarter of 2002 was $104 thousand less than the total for the same period
in 2001.

For the  first  three  months  of 2002,  the cost of  funds  averaged  3.46 %, a
decrease of 242 basis  points  from the average  cost of funds rate of 5.58 % in
the first three months of 2001.  This decline in the cost of funds rate,  though
noteworthy,  was 54 basis  points less than the  decline in the  earning  assets
yield. This was the result,  primarily, of a significant  percentage,  64.3%, of
average interest-bearing  liabilities being in the category of time deposits, an
interest-bearing liability which is not repriceable for a fixed time period.



                                       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, 2002 and 2001.

Table Two       Net interest Income and Average Balance Analysis
                       for the Three Months Ended March 31
                                  2002 and 2001

<Table>
<Caption>
                                                                                                 Interest               Average
Interest-Earning Assets (000)                                Average       Balance            Income/Expense         Yield / Cost
                                                               2002          2001           2002         2001        2002      2001
                                                               ----          ----           ----         ----        ----      ----

<S>                                                       <C>            <C>            <C>          <C>             <C>      <C>
Due From Banks - Int-Bearing .........................    $   8,270          3,235      $      34           44       1.67%     4.64%
Investments ..........................................       10,340         16,696            151          265       5.92%     6.35%
Loans ................................................      130,815         86,670          2,165        2,145       6.71%    10.04%
                                                          ---------      ---------      ---------    ---------       ----     -----
Total Interest Earning Assets ........................    $ 149,425        106,601      $   2,350        2,454       6.38%     9.34%

Noninterest-Earning Assets
Cash & Due From Banks ................................    $   2,715          2,095
Loan Loss Reserve ....................................       (1,457)        (1,073)
Investments: Fair value ..............................          160             29
Premises & Equipment .................................        2,846          2,877
Interest Receivable & Other ..........................        2,256          2,351
                                                          ---------      ---------
Total Noninterest-Earning Assets .....................    $   6,520          6,279

TOTAL ASSETS .........................................    $ 155,945        112,880
                                                          =========      =========
Interest-Bearing Liabilities
NOW Accounts .........................................    $  28,463         25,262      $     170          302       2.42%     4.85%
Money Market & Savings ...............................        2,707          2,531              9           23       1.35%     3.68%
Time Deposits & IRA's ................................       85,039         59,597            817          965       3.90%     6.56%
Fed Funds Purchased & Repos ..........................        5,627          2,704             17           29       1.23%     4.35%
Other borrowed funds .................................       10,067          3,222            112           34       4.51%     4.28%
Demand Notes Issued to Treasury ......................          336            178              1            2       1.21%     4.55%
                                                          ---------      ---------      ---------    ---------       ----     -----
Total Interest-Bearing Liabilities ...................    $ 132,239         93,494      $   1,126        1,355       3.46%     5.88%

Noninterest-Bearing Liabilities
Demand Deposits ......................................    $   9,447          5,986
Interest Payable .....................................          773            928
Other Liabilities ....................................          381            379
                                                          ---------        -------
Total Non Int-Bearing Liabilities ....................    $  10,601          7,293

Stockholders' Equity .................................    $  13,105         12,093

Total Liabilities & Equity ...........................    $ 155,945        112,880
                                                          =========        =======
Net Interest Income ..................................                                  $   1,224    $   1,099

                     Net Yield on Earning Assets .....                                                               3.32%     4.18%
                     Interest Rate Spread ............                                                               2.92%     3.46%
</Table>







                                       11
<Page>



Non-Interest Income

Non-interest  income  for the  first  three  months of 2002  increased  by $ 223
thousand, or 257 %, over the 2001 amount of $ 87 thousand. Though all categories
of non-interest  income  experienced an increase of some amount, the category of
commissions  and fees had the  greatest  increase  due  primarily  to the income
generated by the bank's  brokerage  services area.  Table Three provides a three
month 2002 to 2001 performance comparative of categories of non-interest income.

Table Three            Summary of Total Noninterest Income
                       for the Three Months Ended March 31
                                  2002 and 2001
                             (Dollars in thousands)

                                                             2002           2001
                                                             ----           ----
Service Charges ..................................           $ 60           $ 45
Commissions & Fees ...............................            235             30
Other Non-interest Income ........................             15             12
                                                             ----           ----
Total ............................................           $310           $ 87

Non-Interest Expense

Non-interest  expense  for the  first  three  months of 2002  increased  by $122
thousand,  or 15 %, over the first three months total of $793  thousand in 2001.
While  some of the  operational  expense  increase  experienced  in 2002  can be
attributed to the overall growth the bank experienced, 13 %, or $76 thousand, of
the  salaries  and  employee   benefits  expense  increase   resulted  from  the
commissions  paid on the increased  income  generated by the brokerage  services
area.

Table  Four  provides  a three  month 2002 to 2001  performance  comparative  of
various categories of non-interest expense.

Table Four             For the Three Months Ended March 31
                                  2002 and 2001
                             (Dollars in thousands)

                                                             2002           2001
                                                             ----           ----
Salaries & Employee Benefits .....................           $596           $493
Occupancy & Equipment ............................            125            118
Other ............................................            194            182
                                                             ----           ----
Total ............................................           $915           $793





                                       12
<Page>


Income Taxes

Through March 31, 2002,  $25 thousand had been accrued as a deferred tax benefit
resulting  from a  deferred  tax  asset  created  by income  transferred  to the
provision for loan losses above the amount deductible for income tax purposes in
the  current  year.  Though  deductible  for  state  income  tax  purposes,  the
non-deductibility   for  federal  income  tax  purposes  of  the  $110  thousand
year-to-date  charge to earnings as a provision for potential future loan losses
served for book tax purposes to reduce the Corporation's taxes by 12.7 %.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first  three  months of 2002,  $3,000,000  of  investment  securities
matured. Investment securities purchased during this period totaled $5,000,000.

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

March 31, 2002                                                         Available for Sale                    Held for Investment
                                                                       ------------------                    -------------------
                                                                 Amortized             Fair             Amortized              Fair
                                                                   Cost                Value               Cost               Value
<S>                                                              <C>                 <C>                 <C>                 <C>
Due in one year or less ............................             $                   $     0             $     0             $     0
Due from one to five years .........................               9,000               9,044                 500                 522
Due from five to ten years .........................               1,000                 968                   0                   0
Due After ten years ................................                 123                 119                 850                 897
                                                                 =======             =======             =======             =======
                                                                 $10,123             $10,131             $ 1,350             $ 1,419
</Table>

<Table>
<Caption>
December 31, 2001                                                    Available for Sale                      Held for Investment
                                                                     ------------------                      -------------------
                                                                 Amortized            Fair             Amortized               Fair
                                                                    Cost              Value               Cost                 Value
<S>                                                               <C>                 <C>                 <C>                 <C>
Due in one year or less ............................              $3,000              $3,011              $    0              $    0
Due from one to five years .........................               4,000               4,138                 500                 531
Due from five to ten years .........................               1,000               1,034                   0                   0
Due After ten years ................................                 123                 119                 850                 912
                                                                  ======              ======              ======              ======
                                                                  $8,123              $8,302              $1,350              $1,443
</Table>




                                       13
<Page>

Loan portfolio

Compared  to March 31,  2001,  at March 31,  2002,  loans had  increased  by $45
million,  or 50.3 %. 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 % of the total loan
portfolio.

On March 31, 2002,  there were two loans  totaling  $315  thousand on nonaccrual
status.

                          Table Six Analysis of Loans
                            March 31 Balances (000's)

<Table>
<Caption>
                                                                          2002                              2001
                                                                          ----                              ----
Real Estate:
<S>                                                                    <C>                 <C>            <C>                 <C>
   Construction / Land Development .........................           $ 13,191              9.8%         $ 11,284             12.6%
   1-4 Family Residential Properties .......................             26,208             19.5%           18,368             20.5%
   Multifamily Residential Properties ......................              1,126               .8%            1,569              1.8%
   Nonfarm Nonresidential Properties .......................             52,917             39.4%           29,859             33.4%
   Other Real Estate Loans .................................              1,137               .9%              503               .6%
Commercial & Industrial ....................................             39,000             29.0%           27,378             30.6%
Consumer ...................................................                830               .6%              462               .5%
Other ......................................................                 52                -%               52                -%
                                                                       ========                           ========
TOTAL ......................................................           $134,461            100.0%         $ 89,475            100.0%
</Table>

Table Seven    Analysis of Loan Maturities and Repricing Frequency
                              as of March 31, 2002
                            ($ 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 ................        $119,648                                                                        $119,648

Fixed Rate Loans ...................        $  3,518        $  2,361        $  2,916        $  3,353        $  2,350          14,498

Total Loans ........................        $123,166        $  2,361        $  2,916        $  3,353        $  2,350        $134,146
</Table>

Excludes loans on non-accrual status of $315


                                       14
<Page>

The  allowance for loan losses is analyzed  monthly in  accordance  with a board
approved  plan.  This  judgmental  analysis is based upon a model that assigns a
risk rating to each individual loan and considers the loss risks associated with
various 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 March 31, 2002
and 2001, 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

                                                       2002              2001
                                                       ----              ----
Balance at Beginning of Year ..............       $ 1,450,000        $ 1,055,000
Provision Charged to Operations ...........           109,850             54,975
Loans Charged-off .........................           (75,000)                 0
Loan Recoveries ...........................               150                 50
                                                  -----------        -----------
Balance At End Of Period ..................       $ 1,485,000        $ 1,110,025

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,  that 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 Corporation's  earning assets and interest bearing liabilities
within defined time periods is referred to as  "gap"analysis.  The Corporation'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, 2002,  the  cumulative  one-year gap for the  Corporation  was a positive or
asset sensitive $ 33.6 million. At March 31, 2002, the cumulative  five-year gap
for the  Corporation  was a positive $ 14.6  million.  A positive gap means that
assets would reprice faster than  liabilities  if interest  rates  changed.  The
Corporation'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 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 March 31, 2002.


                                       15
<Page>


Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                     Repricing Schedule as of March 31, 2002
                            ($ 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 ..................................................        $ 15,500         $      0          $      0        $ 15,500
Investment Securities ...........................................               0            9,500             1,973          11,473
FHLB Stock ......................................................             600                0                 0             600
Loans** .........................................................         125,527            6,269             2,350         134,146
                                                                         ========         ========          ========        ========
Total ...........................................................        $141,627         $ 15,769          $  4,323        $161,719

** Excludes $315 in loans on non-accrual status .................

Interest-Bearing Liabilities
NOW Accounts ....................................................        $ 30,254         $      0          $      0        $ 30,254
Savings & MMIA ..................................................           3,083                0                 0           3,083
Time Deposits: $100m & > ........................................          13,638            4,668                 0          18,306
Time Deposits: < $100m ..........................................          54,261           20,045                 0          74,306
Repurchase Agreements ...........................................           6,360                0                 0           6,360
Other Borrowed Funds ............................................             460           10,000                 0          10,460
                                                                         ========         ========          ========        ========
Total ...........................................................        $108,056         $ 34,713          $      0        $142,769

Period Gap ......................................................        $ 33,571         $(18,944)         $  4,323        $ 18,950

Cumulative Gap ..................................................        $ 33,571         $ 14,627          $ 18,950

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities .................................           131.1%            45.4%

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ................................           131.1%           110.2%
</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 ...........................              $   700              $12,938              $ 4,668              $18,306
</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 77.1% of total  assets at March 31, 2002.  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 $992,072 increase in equity during the twelve month period between March 31,
2001 and 2002 resulted from a $1,002,400  increase in retained earnings,  plus a
$48,000 stock purchase,  net of a $58,328 decrease 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, 2002 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, 2002                                       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) .......................         $14,621           10.8%       $10,845           8.0%       $13,557           10.0%

Tier 1 Capital (to risk
weighted assets) .......................         $13,136            9.7%       $ 5,423           4.0%       $ 8,134            6.0%

Tier 1 Capital (to
average assets) (leverage) .............         $13,136            8.4%       $ 6,234           4.0%       $ 7,792            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  has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                     First South Bancorp, Inc.

                                     s/Barry L. Slider
May 10, 2002                        --------------------------------------------
                                    Barry L. Slider, President and Chief
                                    Executive Officer


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




























                                       19