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WASHINGTON, N.C., Jan. 15 First South Bancorp, Inc.  (Nasdaq: FSBK) (the “Company”), the ancestor captivation aggregation of First South Bank (the “Bank”), letters its unaudited balance for both the division and year concluded December 31, 2009.

Net assets was $1.5 million ($0.16 per allotment diluted) for the 2009 fourth division compared to net assets of $1.8 million ($0.18 per allotment diluted) for the affiliated 2009 third quarter, and $2.0 million ($0.21 per allotment diluted) for the allusive 2008 fourth quarter.

Net assets for the year concluded December 31, 2009 was $7.0 million ($0.72 per allotment diluted) compared to net assets of $11.0 million ($1.12 per allotment diluted) for the year concluded December 31, 2008.

The Bank recorded accoutrement for acclaim losses of $2.7 million in the 2009 fourth division compared to $1.3 million in the affiliated 2009 third division and $1.2 million in the allusive 2008 fourth quarter. Credit accident accoutrement were all-important to furnish net charge-offs and strengthen the allowance for acclaim losses at levels the Bank believes is able to blemish apparent losses in the accommodation portfolio. The accepted akin of the allowance for acclaim losses after-effects from an centralized accident allocation appraisal and is primarily attributable to the bartering absolute acreage portfolio.  The allowance for acclaim losses was $13.7 million at December 31, 2009, apery 2.04% of absolute loans and leases.  

Bill Wall, controlling carnality admiral and arch banking officer, stated, “We accept taken a bourgeois aspect in our accessories for acclaim losses as we abide to aggressively administer botheration assets.  We accept the accepted akin of our allowance for acclaim losses is adequate, however, there is no affirmation in the approaching that regulators, added risks in the accommodation portfolio, or changes in bread-and-butter altitude will not crave added adjustments to the allowance for acclaim losses.”  

“We acceptable account from economists that the accepted recession may activate easing.  However, the accepted bread-and-butter ambiance continues to be a arduous acclaim ambiance for both our barter and the cyberbanking industry.  As we abode and administer through these challenges, we abide focused on abiding strategies.  These strategies cover remediating botheration assets, advancement able levels of basic and liquidity, convalescent ability in our operations, architecture amount chump relationships and convalescent our authorization amount alternating with actor value.  The Company charcoal profitable, continues to advance a able basic position in balance of the well-capitalized authoritative guidelines, and accumulated with deepening of the allowance for acclaim losses should enhance our approaching balance as the accepted recessionary bread-and-butter altitude essentially improve,” declared Wall.

Net absorption assets added to $8.9 million for the 2009 fourth division from $8.3 for both the affiliated 2009 third division and the allusive 2008 fourth quarter. The access in net absorption assets in the accepted division has been afflicted by bead repricing and the rollover of crumbling time deposits at lower absorption rates. The net absorption allowance bigger to 4.55% for the 2009 fourth division from 4.13% for the affiliated 2009 third division and 4.08% for the allusive 2008 fourth quarter.

Total non-interest assets bigger to $2.5 million for the 2009 fourth division from $2.4 million for the affiliated 2009 third division and $2.1 million for the allusive 2008 fourth quarter.  The Bank maintained a connected akin of acquirement above both accommodation and bead account offerings as accommodation fees, bead fees and account accuse and application fee assets was $2.1 million in the 2009 fourth division and $2.0 million in both the affiliated 2009 third division and the allusive 2008 fourth quarter.

Net assets accustomed from the auction of mortgage loans was $262,000 in the 2009 fourth quarter, $247,000 in the affiliated 2009 third division and $74,000 in the allusive 2008 fourth quarter.  

Total non-interest amount beneath to $6.3 million for the 2009 fourth division from $6.5 million for the affiliated 2009 third quarter, compared to $6.0 million for 2008 fourth quarter.  Compensation and binding benefits, the better basic of non-interest expense, has remained almost connected at $3.6 million for the 2009 fourth quarter, $3.5 million for the affiliated 2009 third quarter, and $3.3 million for the allusive 2008 fourth quarter, absorption the Bank’s efforts of managing its animal assets cost. FDIC allowance premiums added to $298,000 for the 2009 fourth division from $275,000 for the affiliated 2009 third division and $127,000 for the allusive 2008 fourth quarter, absorption added accident based appraisal ante imposed by the FDIC.  

Total assets beneath to $829.9 million at December 31, 2009 from $875.9 million at December 31, 2008. Total loans beneath to $658.7 million at December 31, 2009 from $744.7 million at December 31, 2008, absorption a aggregate of arch repayments and a abatement in the aggregate of loans originated for investment during the accepted year.   Mortgage-backed balance added to $97.2 million at December 31, 2009 from $32.8 million at December 31, 2008, absorption the securitization of assertive mortgage loans originated for auction during 2009.  Cash, absorption address deposits and investment balance beneath to $30.0 million at December 31, 2009 from $63.3 million at December 31, 2008, as the Bank has focused efforts on abbreviation lower acquiescent assets.

Nonaccrual and restructured loans beneath to $10.2 million at December 31, 2009 from $15.0 million at December 31, 2008, absorption management’s efforts of remediating botheration assets and managing acclaim quality.  Management believes it has thoroughly evaluated its nonaccrual loans and they are either able-bodied collateralized or abundantly reserved.

Other absolute acreage endemic added to $10.6 million at December 31, 2009 from $7.7 million at December 31, 2008, absorption an access in foreclosure action of assertive absolute acreage backdrop during 2009. Based on fair amount analysis, the Bank believes the adapted accustomed ethics of these absolute acreage backdrop are adumbrative of their fair bazaar values, although there are no assurances that the ultimate sales prices will be according to or greater than the accustomed values.  

Total deposits beneath to $688.5 million at December 31, 2009 from $716.4 million at December 31, 2008. Borrowings beneath during 2009 to $37.4 million at December 31, 2009 from $52.6 million at December 31, 2008.  During 2009, the Bank chose to not bout college time bead ante accepting offered by assertive aggressive banking institutions in its bazaar area, in adjustment to ascendancy its time bead amount and to abate its lower acquiescent aqueous assets. The amount of funds for the 2009 fourth division bigger to 1.61% from 2.03% for the affiliated 2009 third division and 2.59% for the allusive 2008 fourth quarter. The Bank has been able to advance its amount of funds by the aggregate of appraisement new deposits, the face-lifting of crumbling time deposits and the repositioning of borrowings aural the accepted lower absorption amount environment.  

First South Bancorp, Inc. may be accessed on its website at www.firstsouthnc.com.  The Company’s accepted banal attribute as traded on the NASDAQ Global Select Market is “FSBK”.

First South Bank has been confined the citizens of eastern North Carolina back 1902 and offers a array of banking articles and services, including a leasing company. Securities allowance casework are fabricated accessible through an amalgamation with an absolute broker/dealer. The Bank operates through its capital appointment headquartered in Washington, North Carolina, and has 29 abounding account annex offices and one accommodation assembly offices amid throughout central, eastern, northeastern and southeastern North Carolina.

Statements absolute in this release, which are not actual facts, are advanced statements as authentic in the Private Securities Litigation Reform Act of 1995.  Such advanced statements are accountable to risks and uncertainties which could could cause absolute after-effects to alter materially from those currently advancing due to a amount of factors which cover the accoutrement of approaching bread-and-butter conditions, authoritative budgetary and budgetary policies, aldermanic and authoritative changes, the risks of changes in absorption rates, the accoutrement of competition, and including after limitation to added factors that could could cause absolute after-effects to alter materially as discussed in abstracts filed by the Company with the Securities and Exchange Commission from time to time.

First South Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
		December 31			December 31
		2009			2008	*
Assets		(unaudited)
Cash and due from banks	$	17,758,370		$	20,888,676
Interest-bearing deposits in banking institutions		11,879,794			5,831,683
Investment balance – accessible for sale		407,317			36,563,646
Mortgage-backed balance – accessible for sale		96,725,468			31,995,157
Mortgage-backed balance – captivated for investment		513,882			832,221
Loans and leases receivable, net:
Held for sale		6,548,980			5,566,262
Held for investment		652,106,538			739,165,035
Premises and equipment, net		8,539,759			9,049,929
Other absolute acreage owned		10,561,071			7,710,560
Federal Home Loan Bank of Atlanta stock, at cost
which approximates market		3,889,500			3,658,600
Accrued absorption receivable		3,318,141			3,786,760
Goodwill		4,218,576			4,218,576
Mortgage application rights		1,278,688			1,005,725
Identifiable abstract assets		133,620			165,060
Prepaid costs and added assets		12,010,931			5,417,231
Total assets	$	829,890,635		$	875,855,121
Liabilities and Stockholders’ Equity
Deposits:
Demand	$	224,507,362		$	223,365,542
Savings		23,137,391			26,555,881
Large church certificates of deposit		224,198,974			207,102,876
Other time		216,667,331			259,402,497
Total deposits		688,511,058			716,426,796
Borrowed money		37,380,388			52,558,492
Junior subordinated debentures		10,310,000			10,310,000
Other liabilities		7,475,085			8,738,808
Total liabilities		743,676,531			788,034,096
Common stock, $.01 par value, 25,000,000 shares authorized;
11,254,222 issued; 9,742,296 and 9,738,096 shares outstanding		97,423			97,381
Additional paid-in capital		35,841,364			35,924,426
Retained earnings, essentially restricted		82,111,114			82,867,095
Treasury banal at cost		(32,158,074)			(32,247,365)
Accumulated added absolute income, net		322,277			1,179,488
Total stockholders’ equity		86,214,104			87,821,025
Total liabilities and stockholders’ equity	$	829,890,635		$	875,855,121
*Derived from audited circumscribed banking statements

First South Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
(unaudited)
		Three Months Ended						Year Ended
		December 31						December 31
		2009			2008			2009			2008
Interest income:
Interest and fees on loans	$	10,782,733		$	12,460,618		$	45,211,260		$	55,182,193
Interest and assets on investments and deposits		1,068,842			911,604			3,848,639			4,181,602
Total absorption income		11,851,575			13,372,222			49,059,899			59,363,795
Interest expense:
Interest on deposits		2,644,057			4,538,604			14,459,345			21,095,044
Interest on borrowings		270,558			369,221			1,244,664			1,563,978
Interest on inferior subordinated notes		81,710			169,661			389,677			657,576
Total absorption expense		2,996,325			5,077,486			16,093,686			23,316,598
Net absorption income		8,855,250			8,294,736			32,966,213			36,047,197
Provision for acclaim losses		2,700,000			1,150,000			7,180,000			4,043,600
Net absorption assets afterwards accouterment for acclaim losses		6,155,250			7,144,736			25,786,213			32,003,597
Non-interest income:
Fees and account charges		1,899,647			1,870,412			7,377,019			7,750,195
Loan application fees		182,878			167,577			679,673			658,073
Gain (loss) on auction of added absolute estate, net		(39,409)			(177,380)			(200,732)			(80,542)
Gain on auction of mortgage loans		261,737			74,027			1,197,029			586,571
Gain on auction of mortgage-backed securities		-			-			-			97,537
Gain on auction of investment securities		-			-			917,866			-
Other  income		221,584			214,378			988,865			1,071,726
Total non-interest income		2,526,437			2,149,014			10,959,720			10,083,560
Non-interest expense:
Compensation and binding benefits		3,595,642			3,309,183			14,118,842			13,750,085
Federal allowance premiums		298,510			127,182			1,253,627			280,372
Premises and equipment		451,806			456,381			1,823,628			1,969,006
Advertising		23,341			25,816			123,513			112,758
Payroll and added taxes		309,928			275,979			1,327,449			1,246,743
Data processing		623,089			677,044			2,452,593			2,630,821
Amortization of abstract assets		117,268			102,351			488,602			434,260
Other		880,283			1,013,182			3,756,547			3,740,652
Total non-interest expense		6,299,867			5,987,118			25,344,801			24,164,697
Income afore assets taxes		2,381,820			3,306,632			11,401,132			17,922,460
Income taxes		872,050			1,287,170			4,365,296			6,934,640
Net income	$	1,509,770		$	2,019,462		$	7,035,836		$	10,987,820
Per allotment data:
Basic balance per share	$	0.16		$	0.21		$	0.72		$	1.13
Diluted balance per share	$	0.16		$	0.21		$	0.72		$	1.12
Dividends per share	$	0.20		$	0.20		$	0.80		$	0.80
Weighted boilerplate shares-Basic		9,738,475			9,738,096			9,738,225			9,761,944
Weighted boilerplate shares-Diluted		9,738,475			9,743,987			9,738,244			9,781,761

First South Bancorp, Inc.		Supplemental Quarterly Financial Data (Unaudited)
			12/31/2009		9/30/2009		6/30/2009		3/31/2009		12/31/2008
Consolidated antithesis area data:		(dollars in bags except per allotment data)
Total assets		$	829,891	$	855,933	$	886,192	$	875,850	$	875,855
Loans receivable (net):
Mortgage			51,820		49,944		53,537		60,132		46,252
Commercial			508,279		528,216		547,904		566,706		585,893
Consumer			88,893		92,809		94,749		98,292		101,180
Leases			9,664		10,727		9,717		10,692		11,406
	Total		658,656		681,696		705,907		735,822		744,731
Cash and investments			30,045		46,741		57,342		50,867		63,284
Mortgage-backed securities			97,239		86,275		81,596		51,100		32,827
Premises and equipment			8,540		8,608		8,714		8,866		9,050
Goodwill			4,219		4,219		4,219		4,219		4,219
Mortgage application rights			1,279		1,247		1,230		1,079		1,006
Deposits:
Savings			23,138		23,407		24,730		26,561		26,556
Checking			224,507		220,018		225,647		224,249		223,366
Certificates			440,866		466,426		480,634		469,624		466,505
	Total		688,511		709,851		731,011		720,434		716,427
Borrowings			37,380		39,040		49,695		49,606		52,558
Junior subordinated debentures			10,310		10,310		10,310		10,310		10,310
Stockholders’ equity			86,214		87,281		86,708		87,785		87,821
Consolidated balance summary:
Interest income		$	11,851	$	12,196	$	12,442	$	12,571	$	13,372
Interest expense			2,996		3,922		4,546		4,629		5,078
Net absorption income			8,855		8,274		7,896		7,942		8,294
Provision for acclaim losses			2,700		1,260		1,700		1,520		1,150
Noninterest income			2,527		2,401		3,212		2,821		2,149
Noninterest expense			6,300		6,530		6,513		6,002		5,987
Income taxes			872		1,123		1,135		1,236		1,287
Net income		$	1,510	$	1,762	$	1,760	$	2,005	$	2,019
Per Share Data:
Earnings per share-Basic		$	0.16	$	0.18	$	0.18	$	0.21	$	0.21
Earnings per share-Diluted		$	0.16	$	0.18	$	0.18	$	0.21	$	0.21
Dividends per share		$	0.20	$	0.20	$	0.20	$	0.20	$	0.20
Book amount per share		$	8.85	$	8.96	$	8.90	$	9.01	$	9.02
Average shares-Basic			9,738,475		9,738,475		9,738,096		9,738,096		9,738,096
Average shares-Diluted			9,738,475		9,738,550		9,738,096		9,738,096		9,743,987

			12/31/2009		9/30/2009		6/30/2009		3/31/2009		12/31/2008
		(dollars in bags except per allotment data)
Performance ratios:
Yield on earning assets			6.09%		6.09%		6.10%		6.19%		6.57%
Cost of funds			1.61%		2.03%		2.32%		2.37%		2.59%
Net absorption spread			4.48%		4.06%		3.78%		3.82%		3.98%
Net absorption allowance on earning assets			4.55%		4.13%		3.87%		3.91%		4.08%
Earning assets to absolute assets			91.81%		92.38%		92.43%		92.79%		92.29%
Return on boilerplate assets			0.72%		0.81%		0.80%		0.91%		0.92%
Return on boilerplate disinterestedness			6.88%		8.06%		7.98%		9.07%		9.19%
Efficiency arrangement			55.28%		61.10%		58.57%		55.70%		57.25%
Dividend payout ratio			125.00%		111.11%		111.11%		95.24%		95.24%
Average assets		$	842,556	$	867,976	$	881,307	$	878,795	$	879,864
Average earning assets		$	777,896	$	801,625	$	816,210	$	812,831	$	813,993
Average equity		$	87,762	$	87,418	$	88,240	$	88,443	$	87,876
Equity/Assets			10.39%		10.20%		9.78%		10.02%		10.02%
Tangible Equity/Assets			9.86%		9.69%		9.29%		9.52%		9.53%
Asset above abstracts and ratios:
Nonaccrual loans		$	5,838	$	7,132	$	7,609	$	6,940	$	10,727
Restructured loans		$	4,343	$	4,304	$	4,304	$	4,276	$	4,275
Total nonperforming loans		$	10,181	$	11,436	$	11,913	$	11,216	$	15,002
Other absolute acreage endemic		$	10,561	$	12,474	$	10,408	$	10,573	$	7,711
Total nonperforming assets		$	20,742	$	23,910	$	22,321	$	21,789	$	22,713
Allowance for accommodation and charter losses		$	13,504	$	12,318	$	11,726	$	10,878	$	11,618
Allowance for unfunded accommodation commitments		$	240	$	269	$	269	$	312	$	340
Allowance for acclaim losses		$	13,744	$	12,587	$	11,995	$	11,190	$	11,958
Allowance for accommodation and charter losses to loans			2.00%		1.77%		1.63%		1.45%		1.53%
Allowance for unfunded accommodation commitments
	to unfunded commitments		0.27%		0.29%		0.28%		0.30%		0.29%
Allowance for acclaim losses to loans			2.04%		1.81%		1.67%		1.50%		1.58%
Net charge-offs (recoveries)		$	1,543	$	668	$	894	$	2,288	$	854
Net charge-offs (recoveries) to loans			0.234%		0.098%		0.127%		0.311%		0.115%
Nonperforming loans to loans			1.55%		1.68%		1.69%		1.52%		2.01%
Nonperforming assets to assets			2.50%		2.79%		2.52%		2.49%		2.59%
Loans to deposits			95.66%		96.03%		96.57%		102.16%		103.95%
Loans to assets			79.37%		79.64%		79.66%		84.03%		85.03%
Loans serviced for others		$	289,324	$	281,935	$	268,266	$	254,195	$	255,510

For added advice contact:
Bill Wall (CFO)
Phone: (252) 940-5017
Website: www.firstsouthnc.com

SOURCE First South Bancorp, Inc.

RELATED LINKS

http://www.firstsouthnc.com

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