UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No. ___)

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

Payment of Filing Fee (Check the appropriate box):

First South Bancorp, Inc.

April 19, 2013

Dear Fellow Stockholder:

You are invited to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of First South Bancorp, Inc. (the “Company”) to be held at the main office of First South Bank (the “Bank”) located at 1311 Carolina Avenue, Washington, North Carolina on Thursday, May 23, 2013, at 11:00 a.m., Eastern Time.

The attached Notice of Annual Meeting and Proxy Statement (the “Proxy Materials”) describe the formal business to be transacted at the Annual Meeting, which includes a report on the operations of the Company. Also enclosed is a copy of our 2012 Annual Report. Directors and officers of the Company and the Bank will be present at the Annual Meeting to respond to any questions that you and other stockholders may have.

The Proxy Materials and our 2012 Annual Report are also available to our stockholders on a publicly accessible Internet website. You may read, print and download our Proxy Materials and our 2012 Annual Report at http://www.cfpproxy.com/4205. Also included on the publicly accessible Internet website is our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, which contains detailed information concerning the activities and operating performance of the Company.

The business to be conducted at the Annual Meeting consists of the election of three directors and the ratification of the appointment of Turlington and Company, L.L.P. as our independent registered public accounting firm for the year ending December 31, 2013. The Board of Directors unanimously recommends a vote “FOR” the election of the director nominees, and “FOR” the ratification of the appointment of Turlington and Company, L.L.P. as our independent registered public accounting firm for the year ending December 31, 2013.

On behalf of the Board of Directors, we urge you to vote now, even if you currently plan to attend the Annual Meeting. Please sign, date and return the accompanying Proxy Card as soon as possible. Your vote is important, regardless of the number of shares you own. This will not prevent you from voting in person but will assure that your vote is counted if you are unable to attend the meeting. It will also help ensure that a quorum is present for the conduct of business at the meeting.

On behalf of the Board of Directors and all the employees of the Company and the Bank, I wish to thank you for your continued support.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of First South Bancorp, Inc. (the “Company”) will be held at the main office of First South Bank (the “Bank”) located at 1311 Carolina Avenue, Washington, North Carolina on Thursday, May 23, 2013, at 11:00 a.m., Eastern Time.

The Annual Meeting is for the purpose of considering and acting upon the following matters:

1. The election of three directors to serve three-year terms;

2. The ratification of the appointment of Turlington and Company, L.L.P. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013; and

such other matters that properly come before the meeting or any adjournment thereof. The Board of Directors is not aware of any other business to come before the Annual Meeting.

Stockholders of record at the close of business on April 2, 2013 will be entitled to vote at the Annual Meeting and any adjournments.

We are enclosing a copy of First South Bancorp, Inc.’s 2012 Annual Report with this proxy statement.

You can vote in one of three ways as follows: Mark, sign and date your proxy card and return it promptly in the enclosed postage paid envelope; or, call toll free 1-855-484-1033 on a touch-tone phone (there is no charge to you for this call); or, via the Internet at http://www.rtcoproxy.com/fsbk and follow the instructions.

If you choose to vote by signing and returning the enclosed Proxy Card, which is solicited by the Board of Directors, please mail it promptly in the enclosed postage paid envelope. The proxy will not be used if you attend and vote at the Annual Meeting in person.

Washington, North Carolina

April 19, 2013

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. ENCLOSED IS A PROXY CARD WITH A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE WILL BE REQUIRED IF MAILED IN THE UNITED STATES.

This Proxy Statement is furnished to stockholders of First South Bancorp, Inc. (the “Company”) in connection with the solicitation by the Board of Directors of the Company (the “Board”) of proxies to be used at the Annual Meeting of Stockholders (the “Annual Meeting”) which will be held at the main office of First South Bank (the “Bank”) located at 1311 Carolina Avenue, Washington, North Carolina on Thursday, May 23, 2013, at 11:00 a.m., Eastern Time, and at any adjournment thereof. The accompanying Notice of Annual Meeting and proxy card and this Proxy Statement are being released to stockholders on or about April 19, 2013.

Stockholders who execute proxies retain the right to revoke them at any time. Unless so revoked, the shares represented by properly executed proxies will be voted at the Annual Meeting and all adjournments thereof. Proxies may be revoked by written notice to William L. Wall, Secretary of the Company, at the address shown above, by filing a later-dated proxy prior to a vote being taken on a particular proposal at the Annual Meeting or by attending the Annual Meeting and voting in person. The presence of a stockholder at the Annual Meeting will not in itself revoke such stockholder’s proxy.

Proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given therein. Where no instructions are indicated, proxies will be voted FOR the nominees for director set forth in this Proxy Statement, and FOR the ratification of the appointment of the independent registered public accounting firm. The proxy confers discretionary authority on the persons named therein to vote with respect to the election of any person as a director where the nominee is unable to serve or for good cause will not serve, and matters incident to the conduct of the Annual Meeting. If any other business is presented at the Annual Meeting, proxies will be voted by those named therein in accordance with the determination of a majority of the Board of Directors. Proxies marked as abstentions will not be counted as votes cast. Shares held in “street name” which have been designated by brokers on proxies as not voted will not be counted as votes cast. Proxies marked as abstentions or as broker non-votes, however, will be treated as shares present for purposes of determining whether a quorum is present.

The securities entitled to vote at the Annual Meeting consist of the Company’s common stock, par value $.01 per share (the “Common Stock”). Stockholders of record as of the close of business on April 2, 2013 (the “Record Date”) are entitled to one vote for each share of Common Stock then held. As of April 2, 2013, there were 9,751,271 shares of Common Stock issued and outstanding. The presence, in person or by proxy, of at least one-third of the total number of shares of Common Stock outstanding and entitled to vote will be necessary to constitute a quorum at the Annual Meeting.

Security Ownership of Management. As of April 2, 2013, the beneficial ownership of the Common Stock by each of the Company’s directors, named executive officers, and by directors and executive officers as a group was as follows:

Changes in Control. Management of the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

As of April 2, 2013, no stockholder known to management owned more than 5% of the Company’s Common Stock.

General. The Board currently consists of seven members. The Company’s Articles of Incorporation require that directors be divided into three classes, as nearly equal in number as possible, with approximately one-third of the directors elected each year. At the Annual Meeting, three directors will be elected for terms expiring at the 2016 Annual Meeting. The Board has nominated Bruce W. Elder, Linley H. Gibbs, Jr. and L. Steven Lee to serve as directors for a three-year period. Each nominee is currently a member of the Board. Under Virginia law and the Company’s Bylaws, directors are elected by a plurality of the votes present in person or by proxy at a meeting at which a quorum is present. It is intended that the persons named in the proxies solicited by the Board for the 2013 Annual Meeting will vote for the election of the named nominees. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute as the Board may recommend or the size of the Board may be reduced to eliminate the vacancy. At this time, the Board knows of no reason why any nominee might be unavailable to serve.

The following table sets forth, for each nominee for director and continuing director of the Company, his age, the year he first became a director of the Company and the expiration of his term as a director. Each director of the Company also is a member of the Board of Directors of First South Bank (the “Bank”). All of the directors are independent under the current listing standards of the NASDAQ Stock Market, except for Mr. Elder, because he is an employee of the Company and the Bank. In determining the independence of the directors, the Board also considers transactions, relationships or arrangements between the Company, the Bank and its directors that are not required to be disclosed in the Company’s proxy statement.

Qualifications of Directors. A description of the specific experience, qualifications, attributes, or skills that led to the conclusion that each of the nominees and incumbent directors should serve as a director of the Company is presented below. Each of these directors brings a unique perspective and set of qualifications to the Board. Many are natives of eastern North Carolina and are connected to the local community and the Bank’s market area through their professional pursuits and civic involvement. The Company’s directors have attended many educational programs sponsored by the North Carolina Bankers Association, as well as recurring training sessions with accountants, attorneys and consultants in order to keep them current and informed on key banking issues and strategies.

Bruce W. Elder has been a director of the Company and the Bank since August 2012, and also serves as President and Chief Executive Officer of each of them. Prior to joining the Bank, Mr. Elder was employed with Crescent Financial Corporation and Crescent State Bank of Cary, North Carolina from 1998 to 2012, serving as Senior Vice President and Chief Financial Officer; and with Mutual Community Savings Bank of Durham, North Carolina, serving as Chief Financial Officer. Mr. Elder attended North Carolina State University, graduating with a degree in accounting. He is also a Certified Public Accountant in the State of North Carolina and the Commonwealth of Virginia. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Mr. Elder currently serves.

Linley H. Gibbs, Jr. has been a director of the Bank since 1985. In 1992, Mr. Gibbs retired as a general manager of Hamilton Beach, an appliance manufacturing company in Washington, North Carolina after 23 years with the company. As general manager, he also had responsibilities as senior officer for budgeting and financial oversight. Mr. Gibbs attended the University of North Carolina at Chapel Hill, graduating with a degree in industrial management. He has served on the boards of many local and national civic, service and trade organizations including the Beaufort County Crime Stoppers, Washington Tourism Development Authority, Beaufort County United Way, Washington/Beaufort County Chamber of Commerce and the advisory board of Appliance Magazine. He was also a former local advisory board member of North Carolina National Bank. Mr. Gibbs has previously served as both Chairman and Vice-Chairman of the boards of both the Company and the Bank. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Mr. Gibbs currently serves.

L. Steven Lee has been a director of the Company and the Bank since January 2013. Mr. Lee is a graduate of Chowan College, graduating with a degree in business administration, and the General Motors Merchandizing and Management School. He is the owner, President and General Manager of Lee Chevrolet, Inc. in Washington, North Carolina, which he joined in 1972. He has financial oversight responsibilities of his business, and has the experience necessary to read and understand fundamental financial statements. He is a member of the National Automobile Dealers Association (NADA) and the North Carolina Automobile Dealers Association (NCADA). He currently serves on the board of directors of the NCADA and the Dealers Choice Mutual Insurance Company. He is a member of the Kiwanis Club and the Washington Yacht and Country Club, having served as a member to the board of directors of each organization. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Mr. Lee currently serves.

Charles E. Parker, Jr. has been a director of the Bank since 1971. Mr. Parker attended Wake Forest University, graduating with a degree in physical education. He is Senior Vice President of the Robinson and Stith Insurance Agency in New Bern, North Carolina, which he joined in 1989. He was co-owner of the Morris Insurance Agency in Washington, North Carolina from 1961 to 1988. In the insurance business, he has been active in the appraisal valuation of both residential and commercial property. He has served on the boards and as a member of many local and statewide civic and service organizations including the Craven Regional Medical Center Foundation, New Bern/Craven County Chamber of Commerce, Commodore of the Eastern Carolina Yacht Club, President’s Committee at Wake Forest University and the Wake Forest University Deacon Club. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Mr. Parker currently serves.

Marshall T. Singleton has been a director of the Bank since 1990. He has been a co-owner of B.E. Singleton & Sons, a highway construction firm in Washington, North Carolina, since 1960. Mr. Singleton attended the Citadel University studying engineering. He has served on the boards and as a member of many local civic and service organizations including the Salvation Army, Washington/Beaufort County Chamber of Commerce, Turnage Theater Foundation, Committee of 100 and was a former local advisory board member of First Citizens Bank. He also serves on the board of trustees of the First United Methodist Church. Mr. Singleton currently serves as Vice-Chairman of the Board of both the Company and the Bank. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Mr. Singleton currently serves.

Frederick N. Holscher has been a director of the Bank since 1985 and currently serves as general counsel for the Bank. Mr. Holscher attended the University of North Carolina at Chapel Hill, graduating with a degree in political science. He is also a graduate of the UNC-Chapel Hill law school and is currently an attorney and president of the law firm of Rodman, Holscher, Francisco & Peck, P.A. located in Washington, North Carolina and he has been with the firm since 1973. He is an active member of the Beaufort County Bar Association, the Second Judicial District Bar Association and the North Carolina Bar Association. He has served on the boards of many local and statewide civic and service organizations including the Salvation Army, Washington Board of Realtors, Washington/Beaufort County Chamber of Commerce and the Eastern Region of Friends of the Institute of Government. Mr. Holscher currently serves as Chairman of the Board of both the Company and the Bank, and has previously served as Vice-Chairman of both boards, respectively. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Mr. Holscher currently serves.

Frederick H. Howdy has been a director of the Bank since 1975. He is currently President of Drs. Freshwater and Howdy P.A., a dental health care corporation located in New Bern, North Carolina. Prior to that, he was a practicing dentist in Washington, North Carolina for 36 years. Dr. Howdy did his undergraduate studies at the University of North Carolina at Chapel Hill and received his DDS from the UNC School of Dentistry at Chapel Hill. He has served on the boards of many local and statewide civic and service organizations including the Beaufort County Hospital Foundation, North Carolina Board of Dental Examiners, as president of the North Carolina Dental Foundation, chairman of the Beaufort County ABC Board, chairman of the Beaufort County Health Department and as a commissioner on the North Carolina Banking Commission. Dr. Howdy has previously served as both Chairman and Vice-Chairman of the boards of both the Company and the Bank. See “Committees of the Board of Directors” below for a discussion on the various board committees on which Dr. Howdy currently serves.

The Board of Directors recommends that stockholders vote “FOR” the nominees for director of the Company for the terms indicated.

Executive Officers Who Are Not Directors

The following sets forth information with respect to executive officers who do not serve on the Board of Directors.

Sherry L. Correll joined the Bank in 1985 and currently serves as Executive Vice President of Bank Operations. Prior to 2008, she served as Executive Vice President of Deposit Operations.

Kristie W. Hawkins joined the Bank in 1982. Prior to her current position of Controller and Treasurer, she served as the Bank’s Assistant Treasurer and Assistant Secretary as well as accounting department supervisor.

Paul S. Jaber joined the Bank in 2002 and currently serves as Executive Vice President of Mortgage Operations. Prior to joining the Bank, Mr. Jaber served as Senior Vice President of Mortgage Lending of Triangle Bank in Raleigh, North Carolina from 1999 to 2001, and as Senior Vice President of Mortgage Lending of United Federal Savings Bank of Rocky Mount, North Carolina from 1979 to 1999.

Scott C. McLean joined the Bank in October 2012 and currently serves as Executive Vice President and Chief Financial Officer of the Company and the Bank. Prior to joining the Bank, Mr. McLean served as Executive Vice President, Chief Financial Officer and Chief Risk Officer of KeySource Commercial Bank in Durham, North Carolina from 2007 to 2012. Prior to that, he was employed in various financial accounting and auditing capacities with Southern Community Bank and Trust, Bank of America Corporation, Signet Bank and the Federal Reserve Bank of Richmond. Mr. McLean is a Certified Public Accountant and has a certification as a Commissioned Bank Examiner of the Federal Reserve System.

John F. Nicholson, Jr., joined the Bank in 2006 as Senior Vice President and Credit Risk Manager and became Executive Vice President and Chief Credit Officer in 2008. Prior to joining the Bank, Mr. Nicholson served as a Senior Business Intermediary from 2001 to 2006 with C. J. Harris & Company. Prior to that, Mr. Nicholson had twenty-three years of banking experience in various credit administration capacities with Wachovia Bank and United Carolina Bank. Most recently he served as Senior Vice President and Senior Credit Administrator with United Carolina Bank in Raleigh, North Carolina.

J. Randy Woodson joined the Bank in 2008 and currently serves as Executive Vice President and Chief Operating Officer. Prior to joining the Bank, Mr. Woodson was employed with Crestar Bank from 1984 to 1998 in various commercial loan capacities. Mr. Woodson joined Valley Bank of Roanoke, Virginia in 1998 as Senior Loan Officer and served as Chief Lending Officer from 2000 to 2005 and most recently served with Valley Bank as Executive Vice President and Chief Operating Officer from 2005 to 2007.

Committees of the Board of Directors

The Board meets monthly and may have additional special meetings. During the year ended December 31, 2012, the Board met 16 times. No director attended fewer than 75% in the aggregate of the total number of Company board of directors meetings held during the year ended December 31, 2012, and the total number of meetings held by committees on which he served during such fiscal year.

Audit Committee. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee consists of Directors Gibbs, Lee, Parker and Singleton, who currently serves as Chairperson. The members of the Audit Committee are “independent,” as “independent” is defined in Rule 5605(a)(2) of the NASDAQ Stock Market Rules. The function of the Audit Committee is to select the independent auditors to be engaged by the Company, to review and approve audit reports prepared by the independent auditors, to review and approve audit policies, and to review and approve annual and quarterly Securities and Exchange Commission (“SEC”) filings. The Company’s Board of Directors has determined that one member of the Audit Committee, Linley H. Gibbs, Jr., qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC. Under this definition, an “audit committee financial expert” is a person who has the following attributes: (i) an understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of generally accepted accounting principles (“GAAP”) in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing, auditing, analyzing or evaluating financial statements that are of the same level of complexity that can be expected in the Company’s financial statements, or experience supervising people engaged in such activities; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions. Director Gibbs is “independent,” as such term is defined in Rule 5605(a)(2) of the NASDAQ Stock Market Rules. The Board has adopted a charter for the Audit Committee, and it is available on the Company’s Internet website located at www.firstsouthnc.com. The Audit Committee met seven times during the year ended December 31, 2012.

Executive Committee. The Executive Committee consists of Directors Elder, Gibbs, Howdy, and Holscher, who currently serves as Chairperson. The Executive Committee is authorized, between meetings of the Board, to perform all duties and exercise all authority of the Board, except those duties and authorities delegated to other committees of the Board, and its primary function is to consider matters that require immediate attention. The Executive Committee met 27 times during the year ended December 31, 2012.

Nominating Committee. The Nominating Committee consists of Directors Howdy, Singleton and Holscher, who currently serves as Chairperson. The Nominating Committee nominates persons for election as directors at the Company’s Annual Meeting. The members of the Nominating Committee are “independent directors” as defined in NASDAQ listing standards. The Board has adopted a Charter for the Nominating Committee. The Nominating Committee Charter is available on the Company’s Internet website located at www.firstsouthnc.com. The Nominating Committee met two times during the year ended December 31, 2012.

The Nominating Committee considers a candidate’s personal and professional integrity, knowledge of the banking business, involvement in community business and civic affairs, and also considers whether the candidate would provide adequate representation in the Bank’s market area. There is not a formal policy requiring the Nominating Committee to consider diversity in its identification of nominees to the Board of Directors, however, they value diversity, including diversity of background, experience, and expertise. Any nominee for director made by the Nominating Committee must be highly qualified with regard to some or all the attributes listed in the preceding sentence. In searching for qualified director candidates to fill vacancies, the Nominating Committee solicits the Company’s directors for the names of potential qualified candidates. The Nominating Committee may ask the Company’s directors to pursue their business contacts for the names of potentially qualified candidates. The Nominating Committee would then consider the potential pool of director candidates, select the top candidate based on the candidates’ qualifications and the Board’s needs, and conduct a thorough investigation of the proposed candidate’s background, to ensure there is no past history that would cause the candidate to not be qualified to serve as a director of the Company. The Nominating Committee will consider director candidates recommended by stockholders. Any stockholder wishing to recommend a candidate for consideration by the Nominating Committee as a possible director nominee for election at an upcoming annual meeting of stockholders must provide written notice to the Nominating Committee of such stockholder’s recommendation of a director nominee no later than December 31 of the year preceding the annual meeting of stockholders. Notice should be provided to: Corporate Secretary, First South Bancorp, Inc., 1311 Carolina Avenue, Washington, North Carolina 27889. In the event a stockholder has submitted a proposed nominee, the Nominating Committee would consider the proposed nominee, along with any other proposed nominees, in the same manner in which the Nominating Committee would evaluate nominees for director recommended by directors.

Compensation Committee. The Compensation Committee consists of Directors Holscher, Howdy and Gibbs, who currently serves as Chairperson. The Compensation Committee develops the broad outline of the compensation program and monitors the success of the program in achieving the objectives of the Company’s compensation philosophy. The Compensation Committee is also responsible for the administration of all compensation programs and policies, including the administration of both cash and stock-based incentive programs. The Compensation Committee met one time during the year ended December 31, 2012.

The Compensation Committee operates under a written charter that establishes the Compensation Committee’s responsibilities. The Compensation Committee and the Board of Directors review the Charter periodically to ensure that the scope of the Charter is consistent with the Compensation Committee’s expected role. Under the Charter, the Compensation Committee is charged with general responsibility for the oversight and administration of our compensation program. The Charter vests in the Compensation Committee principal responsibility for determining the compensation of the Chief Executive Officer based on the Compensation Committee’s evaluation of his performance. The Charter also authorizes the Compensation Committee to engage consultants and other professionals without management approval to the extent deemed necessary to discharge its responsibilities. The Compensation Committee Charter is available on the Company’s Internet website located at www.firstsouthnc.com.

Board Policies Regarding Communications with the Board of Directors and Attendance at Annual Meetings

The Board maintains a process for stockholders to communicate with the Board. Stockholders wishing to communicate with the Board should send any communication to William L. Wall, Secretary, First South Bancorp, Inc., 1311 Carolina Avenue, Washington, North Carolina 27889. Any such communication must state the number of shares beneficially owned by the stockholder making the communication. Mr. Wall will forward such communication to the full Board or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case he has the authority to discard the communication or take other appropriate action regarding the communication.

The Company’s policy is to strongly encourage Board member attendance at annual meetings of stockholders. All of the Company’s directors attended the Company’s 2012 annual meeting of stockholders.

Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to regulations promulgated under the Exchange Act, the Company’s officers and directors and all persons who own more than 10% of the Common Stock (“Reporting Persons”) are required to file reports detailing their ownership and changes of ownership in the Common Stock and to furnish the Company with copies of all such ownership reports that are filed. Based solely on the Company’s review of the copies of such ownership reports which it has received in the past fiscal year or with respect to the past fiscal year, or written representations that no annual report of changes in beneficial ownership were required, the Company believes that during the year ended December 31, 2012 all Reporting Persons have complied with these reporting requirements in a timely manner.

Code of Ethics

The Company has adopted a Code of Ethics that applies to the Company’s principal executive officer, principal financial officer and principal accounting officer. The Company has posted such Code of Ethics on its Internet website and intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, the Code of Ethics by posting such information on its Internet website. The Company’s Internet website may be accessed at www.firstsouthnc.com.

Board Leadership Structure and Role in Risk Oversight

The Board is currently led by a chairman who is an independent director. Accordingly, the positions of principal executive officer and chairman are not held by the same person. The Board does not have a formal policy as to whether the roles of chairman and principal executive officer should be separate or combined. Under Virginia law, the Board is responsible for managing the business and affairs of the Company, including the oversight of risks that could affect the Company. Although the entire Board has responsibility for the general oversight of risks, it administers its risk oversight function primarily through committees, including the Audit Committee, Executive Committee, and Compensation Committee, as described above, as well as other committees. The Loan Committee, with the input of the senior credit officer, is responsible for oversight of credit risk and lending policies. The Asset/Liability Management Committee is responsible for oversight of liquidity risk, interest rate risk, and asset/liability management, including the investment securities portfolio. Each of these committees meet regularly and provide reports of their activities and conclusions to the full Board, which is responsible for ratifying the actions of the committees.

Summary Compensation Table. The following information is furnished for all individuals serving as the principal executive officer of the Company and two other most highly compensated executive officers who received total compensation of $100,000 or more, during the year ended December 31, 2012.

Grants of Plan-Based Awards. The following table provides information concerning all award grants made to the Company’s named executive officers in the year ended December 31, 2012.

Employment Agreement. The Company and the Bank maintain an employment agreement with Bruce W. Elder, President and Chief Executive Officer of the Company and the Bank. The employment agreement has an initial term of three years, which commenced on March 19, 2012. On each anniversary of the commencement of the initial term, the term of the employment agreement is automatically extended for one additional year beyond the then-effective expiration date, unless the Board of Directors determines not to extend the term. If the Board of Directors determines not to extend the term of the employment agreement, it must notify Mr. Elder in writing within 60 calendar days of the anniversary date. Unless sooner terminated, Mr. Elder’s employment will terminate when he reaches age 65.

As of December 31, 2012, the annual base salary under Mr. Elder’s employment agreement was $255,000. The employment agreement provides that Mr. Elder’s salary is reviewed at least annually by the Compensation Committee. Mr. Elder’s salary shall be increased no more frequently than annually to account for cost of living increases and may be increased beyond this amount at the discretion of the Compensation Committee. Mr. Elder’s salary cannot be reduced. In addition to base salary, Mr. Elder is entitled to participate in any and all officer or employee compensation, bonus, incentive, stock option, and benefit plans, including plans providing pension, medical, dental, disability, and group life insurance benefits. Mr. Elder is also entitled to reimbursement for all reasonable business expenses and paid annual vacation and sick leave. The employment agreement also provides Mr. Elder with certain benefits and payments upon termination of his employment. See “—Potential Post-Termination and Change in Control Benefits—Employment Agreement.”

The employment agreement further provides that the Company and the Bank shall indemnify Mr. Elder against expenses actually and reasonably incurred by him in connection with any claims arising out of his activities as an officer, employee, or agent of the Company or the Bank or as a person who is serving or has served as a director, officer, employee, agent, or trustee of an affiliated corporation, joint venture, or other enterprise in which the Company or the Bank has an ownership interest. This indemnification obligation is subject to certain exclusions. In addition, during the term of the employment agreement, the Company and the Bank are required to maintain liability insurance covering Mr. Elder.

The employment agreement also includes confidentiality and noncompetition provisions. Under the confidentiality provisions, Mr. Elder has agreed not to disclose certain confidential information concerning the Company or the Bank to outside parties. The noncompetition covenant provides that Mr. Elder will not “Compete” (as defined in the employment agreement) with the Company or the Bank within Beaufort County, North Carolina, or within a 25-mile radius of any full-service office of the Bank (the “Relevant Market”) under certain circumstances. If Mr. Elder’s employment is terminated by the Company or the Bank without “Cause” (as defined in the employment agreement) or by Mr. Elder with “Good Reason” (as defined in the employment agreement), then he may not Compete with the Company or the Bank in the Relevant Market for a period of 6 months from his termination date. If Mr. Elder terminates his employment without Good Reason, he may not Compete with the Company or the Bank in the Relevant Market for a period of 1 year from his termination date. The noncompetition covenant becomes null and void upon a “Change in Control” (as defined in the employment agreement) of the Company or the Bank.

Change-in-Control Protective Agreements. As of December 31, 2012, the Company and the Bank maintained change-in-control protective agreements with J. Randall Woodson and John F. Nicholson, Jr. (the “executives”). The protective agreements for Messrs. Woodson and Nicholson terminate upon the earlier of (a) 12 months from the effective date of their respective agreements, or (b) the date on which the executives terminate employment with the Bank, provided that the rights under the protective agreements will continue following termination of employment if the applicable protective agreement was in effect, at the date of the change in control. On each anniversary date of the effective date of the protective agreements, the term of the protective agreements may be extended for an additional one-year period beyond the then effective expiration date, upon a determination by the Board of Directors that the performance of the executives have met the required performance standards and that such protective agreements should be extended. The protective agreements provide Messrs. Woodson and Nicholson with certain benefits and payments upon termination of their employment in connection with a “change in control” (as defined in the agreement). See “—Potential Post-Termination and Change in Control Benefits – Change in Control Protective Agreement.”

Equity Compensation Plans. The following table sets forth certain information with respect to the Company’s equity compensation plans as of December 31, 2012.

Outstanding Equity Awards. The following table provides information concerning exercisable and unexercisable stock option awards that were outstanding for each named executive officer as of December 31, 2012.

Stock Option Exercises. The were no stock option exercises for any named executive officer during 2012.

Potential Post-Termination and Change in Control Benefits. The Bank maintains certain arrangements with its named executive officers that provide for termination and change in control benefits. The information below describes and quantifies certain compensation that would become payable under our existing plans and arrangements if a named executive officer’s employment had terminated in connection with certain events on December 31, 2012, given the named executive officer’s compensation levels and, if applicable, based on our stock price as of that date. These benefits are in addition to benefits generally made available to our salaried employees, such as accrued vacation and distributions from our tax-qualified plans.

Employment Agreement. Under Mr. Elder’s employment agreement, if the Company or the Bank terminates Mr. Elder’s employment without Cause or if Mr. Elder terminates his employment with Good Reason before March 19, 2013, he will be entitled to a single lump sum cash payment in the amount of $255,000. If the Company or the Bank terminates Mr. Elder’s employment without Cause or if Mr. Elder terminates his employment with Good Reason after March 19, 2013, he will be entitled to a payment equal to his remaining base salary due under the agreement. The employment agreement further provides that if Mr. Elder’s employment terminates involuntarily but without Cause or if Mr. Elder voluntarily terminates his employment with Good Reason before March 19, 2013, the Bank will, at its own expense, provide for the continuation of Mr. Elder’s life and medical insurance benefits. These benefits will continue for a period of one year following the termination of Mr. Elder’s employment. If Mr. Elder’s employment terminates involuntarily but without Cause or if Mr. Elder voluntarily terminates his employment with Good Reason after March 19, 2013, the Bank will provide for the continuation of these insurance benefits until the first to occur of (1) Mr. Elder’s return to employment (either with the Bank or another employer), (2) Mr. Elder’s 65^th birthday, (3) Mr. Elder’s death, or (4) the end of the term remaining under the employment agreement at the time of termination of Mr. Elder’s employment.

The employment agreement also provides Mr. Elder (or his estate) with benefits in the event his employment is terminated due to his disability or death while the agreement is in effect. The Company and the Bank may terminate Mr. Elder’s employment if he becomes “disabled” as defined in the employment agreement. If Mr. Elder becomes incapacitated and is unable to work, he will be entitled to a continuation of his salary and other perquisites and benefits (other than bonus) for any period of incapacity which is prior to the termination of his employment. These benefits will continue until Mr. Elder becomes eligible for benefits under any disability or insurance program maintained by the Bank. The amount of the Bank’s payments to Mr. Elder will be reduced by the amounts payable to him for the same time period under any disability benefit or pension plan covering Mr. Elder. Furthermore, the Bank will, at its own expense, provide for the continuation of Mr. Elder’s life and medical insurance benefits. If Mr. Elder’s employment is terminated due to disability before March 19, 2013, these insurance benefits will continue for a period of one year following termination. If Mr. Elder’s employment is terminated due to disability after March 19, 2013, these benefits will continue until the first to occur of (1) Mr. Elder’s return to employment (either with the Bank or another employer), (2) Mr. Elder’s 65^th birthday, (3) Mr. Elder’s death, or (4) the end of the term remaining under the employment agreement at the time of termination of Mr. Elder’s employment.

Mr. Elder’s employment will terminate automatically on the date of his death. In the event of Mr. Elder’s death during the term of the employment agreement, his estate will be entitled to receive his base salary and reimbursement of expenses through the end of the month in which death occurred. Mr. Elder’s estate will also be entitled to receive any bonus earned or accrued though the date of death, including any unvested amounts awarded for previous years. For a period of one year following Mr. Elder’s death, the Bank will provide continuing health care coverage to Mr. Elder’s family. This coverage will be at the Bank’s expense and will be substantially identical to the coverage that was provided before Mr. Elder’s death.

In the event Mr. Elder voluntarily terminates his employment without Good Reason or he is terminated for Cause, he is entitled to receive only his base salary and reimbursement of expenses through the date of his termination. The employment agreement also provides for a termination benefit in the event Mr. Elder’s employment is terminated without Cause in connection with a Change in Control. If a Change in Control occurs before March 19, 2014, the Change in Control termination benefit will be an amount in cash equal to 200% of Mr. Elder’s “base amount” (as defined in the Internal Revenue Code of 1986, as amended). If a Change in Control occurs after March 19, 2014, the Change in Control termination benefit will be an amount in cash equal to 299% of Mr. Elder’s base amount. The Company and the Bank will also pay up to $25,000 of Mr. Elder’s legal fees associated with the enforcement of his rights under the employment agreement following a Change in Control. Payments and benefits provided under the employment agreement are subject to certain restrictions imposed by Section 409A of the Internal Revenue Code.

Change-in-Control Protective Agreements. As of December 31, 2012, the protective agreements for Messrs. Woodson and Nicholson provide the executives with change in control severance benefits in the event that (i) the executives voluntarily terminate employment within 90 days after an event that occurs during the Protected Period (as defined below) and that constitutes “Good Reason,” or (ii) the Bank, the Company or their successors terminate the executive’s employment during the Protected Period for any reason other than for Just Cause (as defined in the agreement). Under such circumstances, Messrs. Woodson and Nicholson would be entitled to a payment equal to 2.0 times the executive’s annual base salary in effect six months before the change in control occurred. In no event, however, can the severance benefit under the protective agreement exceed the difference between (i) the executive’s Section 280G Maximum (i.e., 2.99 times each executive’s base amount), and (ii) the sum of any other parachute payments, that the executive receives on account of the change in control. The protected period is defined in the protective agreements as the period that begins on the date that is six months before a change in control and ends on the latter of the second anniversary of the change in control or the expiration date of the applicable protective agreement.

The protective agreements for Messrs. Woodson and Nicholson provide that within ten business days of a change in control, the Bank shall fund a trust in the amount of the severance benefit under the protective agreements, that will be used to pay amounts owed to the executives under the protective agreement. In the event that Messrs. Woodson and Nicholson prevail over the Company or the Bank in a legal dispute as to their protective agreements, they will be reimbursed for their legal and other expenses related thereto. The protective agreements for Messrs. Woodson and Nicholson are compliant with the requirements of, and will be administered in accordance with Section 409A of the Code.

Stock Option Agreements. Mr. Woodson has received option grants under the First South Bancorp, Inc. 1997 Stock Option Plan, as amended (the “1997 Plan”). Messrs. Elder, Woodson and Nicholson have received option grants under the First South Bancorp, Inc. 2008 Equity Incentive Plan (the “2008 Plan”). The 1997 Plan provides that in the event of a change in control of the Company or the Bank as defined in the plan, or upon termination due to death, outstanding stock options automatically vest and remain exercisable until the later of two years from the date of death or disability or the expiration date of the stock options. The 2008 Plan provides that, in the event of a change in control of the Company or the Bank as defined in the plan, or upon termination due to death or disability, outstanding stock options automatically vest and remain exercisable until the expiration of the term of the options. Presently, Messrs. Woodson and Nicholson have vested stock options. Additionally, Messrs. Elder, Woodson and Nicholson have unvested options outstanding.

Potential Post-Termination Benefits Tables. The amount of compensation payable to each named executive officer upon the occurrence of a termination event is shown below. The amounts shown assume that such termination was effective as of December 31, 2012, and thus include amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The amounts shown relating to unvested options are based on the fair market value of First South Bancorp common stock on December 31, 2012 of $4.78. The actual amounts to be paid out can only be determined at the time of such executive’s separation from First South Bancorp, Inc. Non-forfeitable, fully vested amounts credited to the accounts of the named executive officers under the Bank’s tax-qualified plans and non-qualified deferred compensation plans and arrangements will be distributed to the named executive officers in accordance with the terms of the respective plans and are not set forth below.

The following table provides the amount of compensation payable to Mr. Elder for each situation listed below:

The following table provides the amount of compensation payable to Mr. Woodson for each situation listed below.

The following table provides the amount of compensation payable to Mr. Nicholson for each situation listed below.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee of the Company’s Board of Directors during the year ended December 31, 2012 were Frederick N. Holscher, Frederick H. Howdy and Linley H. Gibbs, Jr. None of such individuals was an officer or employee of the Company or the Bank during the year ended December 31, 2012, was formerly an officer of the Company or the Bank or had any relationship involving a transaction with the Company required to be disclosed by the Company under Item 13 of the Company’s Annual Report on Form 10-K.

During the year ended December 31, 2012:

DIRECTOR COMPENSATION

The following table provides the compensation received by individuals who served as non-employee directors of the Company during the 2012 fiscal year. This table excludes perquisites, which did not exceed $10,000 in the aggregate for each director.

Fees. Through December 31, 2012, each member of the Bank’s Board of Directors received a fee of $2,750 for each regular and special Board meeting attended and $400 for certain Board committee meetings attended. No fees are paid for attendance at meetings of the Company’s Board. Directors also participate in certain benefit plans of the Company and the Bank, as described below.

Directors are eligible to receive awards under the Company’s 2008 Equity Incentive Plan. During the year ended December 31, 2012, no awards were made to directors under the 2008 Plan.

Directors’ Deferred Compensation Plan Agreements. The Bank maintains a Directors’ Deferred Compensation Plan Agreement with directors Holscher and Singleton. Pursuant to the terms of the agreements, the participating directors agreed to defer the receipt of their directors’ fees in the amount of $350 per month, beginning on January 1, 1994 and ending on December 29, 1998. In exchange for the agreement to defer fees, the directors receive certain retirement benefits (described below). Upon the later to occur of their 65th birthday and January 1, 1999, the Bank shall pay each Director 120 equal monthly payments of the following amounts, unless the Director elects to receive the present value of his benefit in a single lump sum payment: Mr. Holscher - $4,088 and Mr. Singleton - $1,975. The total payments to be made under the Agreement to Messrs. Holscher and Singleton would be $490,560 and $237,000, respectively. During the year ended December 31, 2012, the Company accrued $32,075 and $3,555, for the benefit of Directors Holscher and Singleton, respectively, pursuant to their agreements. In 2012, Mr. Singleton received payments under the agreement in the amount of $23,700.

In the event of a director’s death after becoming entitled to receive a benefit, but before all of the payments have been made, the Bank shall make the remaining payments to the director’s beneficiary. Similarly, in the event of a director’s death while serving as a director but before the qualifying date, the Bank will pay the deferred amount per month for 120 months to the director’s beneficiary. In the event that a director voluntarily resigns after January 1, 1996 but before the qualifying date, then the director will receive a percentage of the monthly benefit. This percentage is generally determined by a formula based on the director’s full years of service after January 1, 1994. The benefits generally vest over a period of five to ten years under the different agreements. All agreements were fully vested at December 31, 2012. Under the agreements, if the directors had resigned on December 31, 2012, Mr. Holscher would begin to receive 120 monthly payments of $4,088, commencing in January 2013. In the event that the director’s service is terminated on or before the qualifying date for a reason other than death or voluntary resignation, then he shall be paid the vested monthly benefit, and the qualifying date shall be deemed to be the date of the director’s termination of service. The deferred compensation plan agreement for Mr. Holscher has been amended to comply with the requirements of, and will be administered in accordance with Section 409A of the Code. Payments and benefits provided under the deferred compensation plan agreement for Mr. Holscher is subject to certain restrictions imposed by Section 409A.

Directors’ Deferred Retirement Plan Agreements. The Bank maintains a directors’ deferred retirement plan agreement with directors Holscher, Parker, and Singleton. Under the terms of the retirement plan agreements, the Bank will pay a director (or his beneficiary in the event of his death) a monthly amount for a period of 120 months beginning upon the director’s retirement plan qualifying date, unless the Director elects to receive the present value of his benefit in a single lump sum payment. The director’s retirement plan qualifying date is defined as the later to occur of the director’s 70th birthday or January 1, 1999. Under the retirement plan agreements, upon attainment of age 70, Messrs. Holscher, Parker, and Singleton each would receive 120 monthly payments of $2,000 for a total of $240,000 for each individual. During the year ended December 31, 2012, the Company accrued $8,108, $6,418, and $10,420 under the retirement plan for the benefit of directors Holscher, Parker, and Singleton, respectively. In 2012, Messrs. Singleton and Parker each received payments under the agreement in the amount of $24,000.

The benefits under retirement plan agreements generally vest over a period of five to ten years under the different agreements. All participants became 100% vested in their benefits as of December 31, 2007. In the event that on or before the retirement plan qualifying date the director’s service is terminated for any reason within 24 months following a change in control, the Bank will pay the director the monthly benefit for a period of 120 months. The retirement plan agreements for Messrs. Holscher and Singleton have been amended to comply with the requirements of, and will be administered in accordance with Section 409A of the Code. Payments and benefits provided under the retirement plan agreements for Messrs. Holscher and Singleton are subject to certain restrictions imposed by Section 409A.

Directors’ Retirement Payment Agreements. The Bank maintains a deferred compensation payment agreement with director Holscher. Under the terms of the payment agreement, Mr. Holscher deferred receipt of director’s fees in an amount equivalent to $291.66 per month over a six-year period. In exchange for the agreement to defer receipt of director’s fees, the director will receive, upon the earlier of the director’s 65th birthday or termination of service as a director for any reason on or after attaining age 55, a certain amount per month for a period of 120 months, unless the director elects to receive the present value of his benefit in a single lump sum payment. Under the payment agreement, upon the earlier to occur of attainment of age 65, or termination of service after attainment of age 55, Mr. Holscher would receive 120 monthly payments of $3,628. The total payments to be made under the agreement to Mr. Holscher will be $435,360. During the year ended December 31, 2012, the Company accrued $24,132 under the payment agreement for the benefit of Mr. Holscher.

In the event of a director’s death after becoming entitled to receive monthly payments but before all payments have been made, the Bank will pay all remaining amounts to the director’s beneficiary. Similarly, in the event of the director’s death prior to the commencement of his monthly payments, the Bank will pay a monthly amount for 120 months to the director’s beneficiary. In the event that prior to the commencement of the monthly payments a director’s service is terminated for any reason other than death, then the director will be entitled to begin receiving his Payments (beginning on a date to be determined by the Bank, but not later than the first day of the sixth month following the month in which the director’s 55th birthday, or if earlier, death, occurs). The retirement payment agreement for Mr. Holscher has been amended to comply with the requirements of, and will be administered in accordance with Section 409A of the Code. Payments and benefits provided under the deferred payment agreement for Mr. Holscher are subject to certain restrictions imposed by Section 409A.

TRANSACTIONS WITH RELATED PERSONS

The Bank offers loans to its directors and executive officers. At December 31, 2012, the Bank’s loans to directors and executive officers totaled $1,105,250, or 1.48% of the Company’s stockholders’ equity at that date. All loans to the Company’s and the Bank’s directors and executive officers and members of their immediate families and corporations or organizations of which a director or executive officer is an executive officer, partner or 10% owner were made in the ordinary course of business on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectibility or present other unfavorable features.

The Company does not have a comprehensive written policy for the review, approval or ratification of certain transactions with related persons. However, in accordance with banking regulations, the Board of Directors reviews all loans made to a director or executive officer, and any such loan must be approved in advance by a majority of the disinterested members of the Board of Directors.

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Turlington and Company, L.L.P. (“Turlington”) has served as the Company’s independent auditors to audit the Company’s seven most recent fiscal year ends and has been appointed by the Company’s Audit Committee to be the independent registered public accounting firm for the 2013 fiscal year, subject to ratification by stockholders, see “Proposal Two — Ratification of Independent Registered Public Accounting Firm,” below.

PROPOSAL TWO – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has appointed Turlington and Company, L.L.P. to be the Company’s independent registered public accounting firm for the year ending December 31, 2013, subject to ratification by stockholders. A representative of Turlington is expected to be present at the annual meeting to respond to appropriate questions from stockholders and will have the opportunity to make a statement should he or she desire to do so.

If the ratification of the appointment of the independent registered public accounting firm is not approved by a majority of the votes cast by stockholders at the annual meeting, other independent registered public accounting firms may be considered by the Audit Committee of the Board of Directors.

The Board of Directors recommends that stockholders vote “FOR” the ratification of the appointment of Turlington and Company, L.L.P. as the Company’s independent registered public accounting firm.

REPORT OF THE AUDIT COMMITTEE

As detailed in the Audit Committee Charter, the role of the Audit Committee of the Board (the “Audit Committee”) is to assist the Board in fulfilling its oversight responsibilities regarding the following:

Management is responsible for the preparation and presentation of the Company’s financial statements and its overall financial reporting process, and with the assistance of the Company’s internal auditors, for maintaining appropriate internal controls and procedures that provide for compliance with accounting standards and applicable laws. The independent auditors are responsible for planning and carrying out a proper audit of the Company’s financial statements, expressing an opinion as to their conformity with generally accepted accounting principles and annually auditing management’s assessment of the effectiveness of internal control over financial reporting. Members of the Audit Committee are not professionally engaged in the practice of auditing and accounting and are not full-time employees of the Company.

In the performance of its oversight function, the Audit Committee, among other things, reviewed and discussed the audited financial statements with management and the independent auditors have confirmed to the Audit Committee that the financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has also discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 16, Communication with Audit Committees, as currently in effect. In addition, the Audit Committee has received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board, regarding the independent auditor’s communication with the Audit Committee concerning independence, has considered whether the provisions of non-audit services by the independent auditors to the Company is compatible with maintaining the auditor’s independence, and has discussed with the auditors the auditor’s independence.

Based upon the review and discussions in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s charter, the Audit Committee recommended to the Board that the audited financial statements for the fiscal year ended December 31, 2012 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission.

Members of the Audit Committee

Marshall T. Singleton, Chairman

Linley H. Gibbs, Jr.

L. Steven Lee

Charles E. Parker, Jr.

AUDIT AND OTHER FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The following information is provided regarding fees billed by the Company’s independent registered public accounting firms for the years ended December 31, 2012 and 2011. Audit fees, audit-related fees, and tax fees were billed by Turlington as follows:

Audit Fees. The aggregate fees billed by Turlington for the audits of the Company’s annual consolidated financial statements and internal control over financial reporting, and for interim reviews of the unaudited financial statements included in the Company’s Quarterly Reports on Form 10-Q, were $126,750 and $123,100 for the years ended December 31, 2012 and 2011, respectively.

Audit-Related Fees. The aggregate fees billed by Turlington for audit-related services relating to the employee benefit plan audit, and the U.S. Department of Housing and Urban Development (HUD)-assisted programs audit, were $27,550 and $26,750 for the years ended December 31, 2012 and 2011, respectively.

Tax Fees. The aggregate fees billed by Turlington for tax services, were $19,500 and $19,000 for the years ended December 31, 2012 and 2011, respectively, relating to preparation of federal and state income tax returns and the review of accrued and deferred income taxes.

All Other Fees. No fees were billed by the Company’s independent auditor for services not included above for the years ended December 31, 2012 and 2011.

OTHER MATTERS

The Board of Directors is not aware of any business to come before the Annual Meeting other than those matters described above in this proxy statement and matters incident to the conduct of the Annual Meeting. However, if any other matters should properly come before the Annual Meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the determination of a majority of the Board of Directors.

MISCELLANEOUS

The cost of soliciting proxies will be borne by the Company. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of Common Stock. In addition to solicitations by mail, directors, officers and regular employees of the Company may solicit proxies personally, or by email, facsimile or telephone without receiving additional compensation.

The Company’s 2012 Annual Report to Stockholders (“Annual Report”), including financial statements, is being mailed to all stockholders of record as of the close of business on the Record Date. The Annual Report is also available to all stockholders on a publicly accessible Internet website at http://www.cfpproxy.com/4205. Any stockholder may obtain a paper copy of the Annual Report by calling the toll-free number 800-951-2405; by visiting the website http://www.cfpproxy.com/4205; or by writing to the Secretary of the Company. The Annual Report is not to be treated as a part of the proxy solicitation material or as having been incorporated herein by reference.

STOCKHOLDER PROPOSALS

Stockholder Proposals for Inclusion in 2014 Proxy Statement. To be eligible for inclusion in the proxy statement of the Company for the 2014 Annual Meeting of Stockholders, stockholder proposals must be received by the Company’s Secretary no later than the close of business on December 20, 2013. Proposals should be sent to the Secretary, First South Bancorp, Inc., 1311 Carolina Avenue, Washington, North Carolina 27889 and follow the procedures required by SEC Rule 14a-8.

Stockholder Director Nominations and Other Stockholder Proposals for Presentation at the 2014 Annual Meeting. Under our Articles of Incorporation, a stockholder who wishes to nominate an individual for election to the Board of Directors directly, or to propose any business to be considered at an annual or special meeting must deliver advance notice of such nomination or proposal to the Company following the procedures in the Articles of Incorporation. The notice must be in writing and contain the information specified in the Articles of Incorporation for a director nomination or other business. To be timely, the notice must be delivered or mailed to the Secretary of the Company not less than thirty days nor more than sixty days prior to the date of the 2014 Annual Meeting. However, if the Company gives less than forty days’ notice of the 2014 Annual Meeting to stockholders, the written notice shall be delivered not later than the close of business on the tenth day following the day on which notice of the 2014 Annual Meeting was mailed to stockholders. Notices should be delivered or mailed to the Secretary of the Company at 1311 Carolina Avenue, Washington, North Carolina 27889. The chairman of the 2014 Annual Meeting may determine whether any nomination or other business has been properly brought before the meeting in accordance with the Company’s Articles of Incorporation. If the chairman determines that a nomination or proposal was not properly brought before the meeting, then the defective nomination or proposal will be disregarded and laid over for action at the next annual or special meeting of stockholders. Management and any other person duly named as proxy by a stockholder will have the authority to vote in their discretion on any nomination for director or any other proposal at an annual meeting if the Company does not receive notice of the nomination or other proposal within the time frames described above.

The requirements described above are separate from the procedures you must follow to submit a nominee for consideration by the Nominating Committee for recommendation to the Board for election as a director as described under “Committees of the Board of Directors” and from the SEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in the Company’s proxy statement pursuant to SEC Rule 14a-8.

April 19, 2013

Washington, North Carolina

ANNUAL REPORT ON FORM 10-K

A copy of the Company’s Annual Report on Form 10-K (without exhibits) for the year ended December 31, 2012, as filed with the Securities and Exchange Commission, will be furnished without charge to stockholders as of the record date upon written request to Corporate Secretary, First South Bancorp, Inc., 1311 Carolina Avenue, Washington, North Carolina 27889. The Company’s Annual Report on Form 10-K is available on a publicly accessible Internet website at http://www.cfpproxy.com/4205.

FIRST SOUTH BANCORP, INC.

Washington, North Carolina

Annual Meeting Materials are available on-line at: http://www.cfpproxy.com/4205

You can vote in one of three ways: