First South Bancorp, Inc. Declares Quarterly Cash Dividend

WASHINGTON, N.C., Sept. 23 /PRNewswire-FirstCall/ -- First South Bancorp, Inc. (Nasdaq: FSBK) (the "Company"), the parent holding company of First South Bank (the "Bank"), reports that on September 23, 2010 the Company's Board of Directors declared a quarterly cash dividend for the quarter ended September 30, 2010 of $0.09 per share, payable October 28, 2010 to stockholders of record as of October 4, 2010.  

This dividend payment is the Company's 54th consecutive quarterly cash dividend.  The annual cash dividend rate is $0.36 per share.  Like all possible dividends, there are no assurances that such anticipated cash dividends will be paid unless appropriately declared by the Board of Directors.  

Bill Wall, Executive Vice President, Chief Financial Officer and Secretary of the Company, stated, "The Board of Directors (the "Board") has adjusted the quarterly cash dividend payment rate based on guidance provided by the Federal Reserve Bank of Richmond (the "Fed"), the Company's primary federal regulatory agency."  The Fed guidance stated, "The Company is expected to act as a source of strength to the Bank.  The payment of dividends exceeding net income is questionable in these uncertain times as continued high levels of loan losses and problem loans can require significant capital.  We consider it more prudent to reduce shareholder dividends at this point and maintain capital in the Bank."  The Board concurs with the Fed's recommendation.

While the Company has continued with positive earnings and with capital levels significantly in excess of the requirements to be well capitalized, the Board felt it was appropriate in consideration of the Fed's guidance to adjust the quarterly cash dividend payment rate accordingly.  In addition, future dividends will depend upon the Company's financial condition, earnings, equity structure, capital needs, economic conditions and regulatory requirements.

First South Bank operates through its main office headquartered in Washington, North Carolina, and has 28 full service branch offices and one loan production office located throughout eastern, northeastern, southeastern and central North Carolina.  The Bank offers a broad range of financial products and services, including a leasing company.  The Bank also makes securities brokerage services available through an affiliation with an independent broker-dealer.

First South Bancorp's common stock is listed on the NASDAQ Global Select Market under the symbol FSBK.  Additional corporate information, product and service descriptions and online services are available to investors and customers through First South Bank's website at www.firstsouthnc.com.  

Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.

SOURCE First South Bancorp, Inc.