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, 2014.

For the 2014 second quarter, net income increased 16.7 percent to $1.29 million, or $0.13 per diluted common share, from net income of $1.10 million, or $0.11 per diluted common share for the linked 2014 first quarter. Net income and earnings per diluted common share for the current quarter declined by $479,000 and $0.05 per diluted common share, respectively, when compared with $1.76 million or $0.18 per diluted common share for the quarter ended June 30, 2013. The improvement in net income on a linked quarter basis reflects increases in net interest income and non-interest income, a decline in non-interest expense and is partially offset by a higher loan loss provision.

Net income for the first six months of 2014 was $2.39 million, or $0.25 per diluted common share, compared to net income of $3.33 million, or $0.34 per diluted common share earned in the first six months of 2013. The company ended the 2014 second quarter with total assets of $711.5 million, total loans and investments of $652.5, total deposits of $592.5 million, and stockholders’ equity of $79.2 million.

Bruce Elder, president and CEO, commented, “Our core earnings, which exclude certain non-recurring revenue items, continues to improve despite the slowdown in mortgage origination activity. We have shown modest, yet quality, net growth in our loan and lease portfolio for four consecutive quarters. Mortgage origination activity during the first half of 2014 is down significantly from the prior year period as the volume of refinances has declined and not been replaced to an equal extent by new purchases. We continue to focus on enhancing net interest income through earning asset growth, increasing non-mortgage related sources of non-interest income and efficiently managing operating expenses to improve bottom-line results.

Elder commented further, “During the quarter ended June 30, 2014, we paid our second consecutive quarterly cash dividend of $0.025 per share. Our dividend payments for the six months ended June 30, 2014 represent a 20 percent payout ratio of diluted earnings per share. The payment of these quarterly dividends reflects the Company’s strong capital position, improved financial performance and our confidence in the future.”

First South Bank has been serving the citizens of eastern and central North Carolina since 1902 and offers a variety of financial products and services, including a leasing company. Securities brokerage services are made available through an affiliation with an independent broker/dealer. The Bank operates through its main office headquartered in Washington, North Carolina, and has 26 full service branch offices located throughout eastern and central North Carolina.

The Company’s common stock symbol as traded on the NASDAQ Global Select Market is “FSBK.”