First South Bancorp, Inc. (FSBK)

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First South Bancorp, Inc. Reports Increase in June 30, 2013 Quarterly and Six Months Operating Results

WASHINGTON, N.C., July 18, 2013 /PRNewswire/ -- First South Bancorp, Inc. (NASDAQ: FSBK) (the "Company"), the parent holding company of First South Bank (the "Bank"), reports its unaudited operating results for the quarter and six months ended June 30, 2013.

For the 2013 second quarter, net income increased 12.7% to $1.8 million, or $0.18 per diluted common share, compared to net income of $1.6 million, or $0.16 per diluted common share for the linked 2013 first quarter, and increased 267.1% when compared to net income of $481,000, or $0.05 per diluted common share, earned for the comparative 2012 second quarter. Net income for the first six months of 2013 increased 253.4% to $3.3 million, or $0.34 per diluted common share, compared to net income of $943,000, or $0.10 per diluted common share earned in the first six months of 2012.

The improvement in earnings for the first six months of 2013, as compared to the first six months of 2012, is primarily attributed to an increase in core non-interest income, a reduction in the provision for credit losses and a decrease in non-interest expenses. These improvements were partially offset by a decline in net interest income due to our lower level of earning assets.

Bruce Elder, President and CEO, commented, "We previously disclosed the execution of a bulk sale of problem loans and took a significant valuation adjustment on OREO that were reflected in our 2012 fourth quarter results. Our 2013 operating results reflect the positive impact of those actions. Although the lower average volume of earning assets resulted in a decline in net interest income when compared with the 2012 reporting periods, improvement in provisions for loan losses, recurring non-interest income and non-interest expenses specifically related to the maintenance and valuation charges of OREO have driven earnings higher. Our focus for the second half of 2013 will be to grow earning assets and reposition our balance sheet to protect against a rising interest rate environment."


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