UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report
November 30, 2007


2340 Woodcrest Place, Suite 200 Birmingham, Alabama		35209
(Address of principal executive offices)		(Zip Code)

(205) 870-1939
(Registrant’s telephone number including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 3.02 Unregistered Sales of Equity Securities

On November 30, 2007, CapitalSouth Bancorp (“CapitalSouth”) issued 98,947 shares of its common stock to James C. Bowen. The shares were issued at a price of $9.80 per share based on the high and low trading prices of CapitalSouth common stock on November 29, 2007 upon the conversion of $969,680.60 of principal of the $6.5 million note issued to Mr. Bowen in connection with the merger of Monticello Bancshares, Inc. into CapitalSouth on September 14, 2007 (the “Merger”). As discussed in CapitalSouth’s Form 8-K dated September 14, 2007, Mr. Bowen received $8 million in notes in connection with the Merger, and pledged $1.5 million as security for Mr. Bowen’s indemnification obligations.

The issuance of the shares of common stock was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The 98,947 shares of common stock to be issued to Mr. Bowen are restricted shares, and may not be sold, transferred or otherwise disposed without registration under the Securities Act or an exemption thereunder.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CAPITALSOUTH BANCORP
December 4, 2007	By	/s/ Carol W. Marsh
		Carol W. Marsh
		Senior Vice President, Secretary and Chief Financial Officer

Commission
File
Number

Registrant

State of
Incorporation

IRS Employer
Identification
Number

000-51660

CapitalSouth Bancorp

Delaware

63-1026645

CapitalSouth Bancorp 8-K