<PAGE>
         
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               __________________

                                FORM 10-KSB/A(1)
(Mark One)

[X]  Annual report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

          For fiscal year ended December 31, 1996

[ ]  Transition report under Section 13 or 15(d) of the Securities Exchange
     Act of 1934  [No fee required]

           For the transition period from ___________ to ____________

          Commission file number  0-28916

                        FIRST SOUTHERN BANCSHARES, INC.
                        -------------------------------
                 (Name of Small Business Issuer in Its Charter)

              GEORGIA                                   58-2171291
  -------------------------------                  -------------------
  (State or Other Jurisdiction of                   (I.R.S. Employer
   Incorporation or Organization)                  Identification No.)


      2727 PANOLA ROAD, LITHONIA, GEORGIA                 30058
   ----------------------------------------             ----------
   (Address of Principal Executive Offices)             (Zip Code)

                                (770) 987-3511
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:  NONE.

Securities registered pursuant to Section 12(g) of the Act:

               10,000,000 SHARES OF COMMON STOCK, $5.00 PAR VALUE
               --------------------------------------------------
                                (Title of Class)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days.

Yes    X       No________

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year:  $5,518,619

Aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past 60 days:
$4,417,460

Page 1 of ______ pages                     Exhibit Index on Page ____
<PAGE>
 
                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

          State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:  553,503 at March 14, 1997.


          Transitional Small Business Disclosure format (check one):  Yes
_________  No     X____


                      DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the Amended Annual Report to Shareholders for the fiscal
year ended December 31, 1996 are incorporated by reference into Part II.


                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

                                  THE COMPANY

GENERAL

          The Company was incorporated as a Georgia business corporation on
February 16, 1995 and became a bank holding company by acquiring all of the
common stock of First Southern Bank (the "Bank") on July 3, 1995.  The Company
presently has two operating subsidiaries, the Bank and FSB Mortgage Services,
Inc. ("Mortgage Services"), a mortgage company.  The Company was organized to
facilitate the Bank's ability to serve its customers' requirements for financial
services.  The holding company structure provides flexibility for expansion of
the Company's banking business through the possible acquisition of other
financial institutions and the provision of additional banking-related services
that the traditional commercial bank may not provide under present laws.  For
example, banking regulations require that the Bank maintain a minimum ratio of
capital to assets.  In the event that the Bank's growth is such that this
minimum ratio is not maintained, the Company may borrow funds, subject to
capital adequacy guidelines of the Federal Reserve, and contribute them to the
capital of the Bank and otherwise raise capital in a manner that is unavailable
to the Bank under existing banking regulations.

          The Company acquired the assets of and employed the personnel of
American Financial Mortgage Corp. on September 6, 1996.  The resulting company,
Mortgage Services, is a mortgage company licensed by the State of Georgia and
has received lender approval from the Department of Housing and Urban
Development, FHA, Fannie Mae and the Veterans Administration.
<PAGE>
 
          The Company has no present plans to acquire any additional operating
subsidiaries.  The Company may, however, make additional acquisitions in the
future in the event that such acquisitions are deemed to be in the best
interests of the Company and its shareholders.  Such acquisitions, if any, will
be subject to certain regulatory approvals and requirements.  See "Business -
Bank Holding Company Regulations."

                                    THE BANK
GENERAL

          The Bank, a state bank located in Lithonia, Georgia, was incorporated
on March 16, 1987, and opened for business on April 26, 1989.

          The Bank's home office is located at 2727 Panola Road, Lithonia,
Georgia 30058.  In 1994, the Bank opened a branch office in the South DeKalb
Mall, Decatur, Georgia and in 1996 opened an additional branch in the Rockbridge
Place Shopping Center, Stone Mountain, Georgia in order to provide more
convenient services for the residents of its service area.  The Bank conducts a
general commercial banking business that serves South DeKalb County, acts as an
issuing agent for U.S. savings bonds, travelers checks and cashiers checks, and
offers collection teller services.  The Bank has no subsidiaries.

          The Bank does not engage in any line of business in addition to normal
commercial banking activities.  The Bank does not engage in any operations in
foreign countries nor is a material portion of the Bank's revenues derived from
customers in foreign countries.

          The philosophy of Bank management continues to be to emphasize prompt
and responsive service to residents of South DeKalb County in order to attract
customers and to acquire market share now controlled by other financial
institutions in the Bank's market area.

THE BANK'S PRIMARY SERVICE AREA

          The Bank's primary service area is South DeKalb County, along with
certain portions of Rockdale County.  The primary focus of the Bank are the
small business and commercial/service firms in the area plus individuals and
households who reside in or commute to the area.  The majority of the Bank's
customers are drawn from the described area.

COMPETITION

          The Bank must compete for both deposit and loan customers with other
financial institutions with greater resources than are available to the Bank.
Currently, there are numerous branches of regional and local banks, as well as
other types of entities offering financial services, located in the Bank's
market area.
<PAGE>
 
DEPOSITS

          The Bank offers a wide range of commercial and consumer deposit
accounts, including non-interest bearing checking accounts, money market
checking accounts (consumer and commercial), negotiable order of withdrawal
("NOW") accounts, individual retirement accounts, time certificates of deposit,
and regular savings accounts.  The sources of deposits typically are residents
and businesses and their employees within the Bank's market area, obtained
through personal solicitation by the Bank's officers and directors, direct mail
solicitation and advertisements published in the local media.  The Bank pays
competitive interest rates on time and savings deposits and has a service charge
fee schedule competitive with other financial institutions in the Bank's market
area, covering such matters as maintenance fees on checking accounts, per item
processing fees on checking accounts, returned check charges and the like.

LOAN PORTFOLIO

          The Bank engages in a full complement of lending activities, including
consumer/installment loans, home equity lines of credit, construction loans and
commercial loans, with particular emphasis on small business loans.  The Bank
believes that the origination of short-term fixed rate loans and loans tied to
floating interest rates is the most desirable method of conducting its lending
activities.

CONSUMER LOANS

          The Bank's consumer loans consist primarily of installment loans to
individuals for personal, family and household purposes, including loans for
automobiles, home improvements and investments.  This category of loans also
includes loans secured by second mortgages on the residences of borrowers.

COMMERCIAL LENDING

          Commercial lending is directed principally toward businesses whose
demands for funds fall within the Bank's legal lending limits and which are
existing deposit customers of the Bank.  This category of loans includes loans
made to individual, partnership or corporate borrowers and obtained for a
variety of business purposes.

INVESTMENTS

          As of December 31, 1996, investment securities comprised approximately
22.60% of the Bank's assets, with loans (net of loan loss reserves) comprising
approximately 61.99% of assets.  The Bank invests primarily in obligations of
the United States or obligations guaranteed as to principal and interest by the
United States and other taxable securities.

ASSET/LIABILITY MANAGEMENT

          It is the objective of the Bank to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash, loan, investment, 
<PAGE>
 
borrowing and capital policies. Certain officers of the Bank are charged with
the responsibility for developing and monitoring policies and procedures that
are designed to ensure acceptable composition of the asset/liability mix. It is
the overall philosophy of management to support asset growth primarily through
growth of core deposits, which include deposits of all categories made by
individuals, partnerships and corporations. Management of the Bank seeks to
invest the largest portion of the Bank's assets in consumer/installment,
commercial and construction loans.

          The Bank's asset/liability mix is monitored on a daily basis with a
report reflecting the interest-sensitive assets and interest-sensitive
liabilities being prepared and presented to the Bank's Board of Directors on a
monthly basis.  The objective of this policy is to control interest-sensitive
assets and liabilities so as to minimize the impact of substantial movements in
interest rates on the Bank's earnings.

CORRESPONDENT BANKING

          Correspondent banking involves the provision of services by one bank
to another bank that cannot provide that service for itself from an economic or
practical standpoint.  The Bank purchases correspondent services offered by
larger banks, including check collections, security safekeeping, investment
services, wire transfer services, coin and currency supplies, overline and
liquidity loan participation, and sales of loans to or participation with
correspondent banks.

EMPLOYEES

          As of December 31, 1996 the Bank had 42 full-time employees.  The Bank
is not a party to any collective bargaining agreement and, in the opinion of
management, the Bank enjoys excellent relations with its employees.
<PAGE>

                    SELECTED FINANCIAL AND STATISTICAL DATA

TABLE 1

AVERAGE BALANCE SHEETS

<TABLE> 
<CAPTION> 
                                                        1996                          1995                          1994
                                            --------------------------    --------------------------    --------------------------
                                                      INTEREST                      INTEREST                      INTEREST
                                            AVERAGE   INCOME/   YIELD/    AVERAGE   INCOME/   YIELD/    AVERAGE   INCOME/   YIELD/
                                            BALANCES  EXPENSE    RATE     BALANCES  EXPENSE    RATE     BALANCES  EXPENSE    RATE
                                            --------------------------    --------------------------    --------------------------
<S>                                         <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C> 
Assets:
Interest-bearing assets:
 Loans (including loan fees) (1)            $27,666    3,104    11.22%    $22,827    2,585    11.32%    $19,240    1,994    10.36%
 Investment securities:
  Taxable                                     9,557      615     6.44%      7,084      375     5.29%      6,285      308     4.90%
  Nontaxable                                  1,939       87     4.49%        172        7     4.07%         --       --       --
 Federal funds sold                           3,867      206     5.33%      3,473      202     5.82%      2,336       95     4.07%
                                            --------------------------    --------------------------    --------------------------
   Total interest-earning assets             43,029    4,012     9.32%     33,556    3,169     9.44%     27,861    2,397     8.60%
 Other non-interest earning assets            5,209                         4,490                         4,264
                                            -------                       -------                       -------
   Total assets                             $48,238                       $38,046                       $32,125
                                            =======                       =======                       =======
Liabilities and stockholders' equity:
Interest bearing liabilities:
 Deposits:
  Interest bearing demand and savings       $ 8,641      267     3.09%    $ 6,971      203     2.91%    $ 6,596      198     3.00%
  Time                                       25,281    1,483     5.87%     18,414    1,066     5.79%     14,777      618     4.18%
 Other borrowings                               255       21     8.24%         34        3     8.82%         --       --       --
                                            --------------------------    --------------------------    --------------------------
   Total interest bearing liabilities        34,177    1,771     5.18%     25,419    1,272     5.00%     21,373      816     3.82%
Other non-interest bearing liabilities        8,644                         7,469                         6,013
Stockholders' equity                          5,417                         5,158                         4,739
                                            -------                       -------                       -------
   Total liabilities and stockholders' 
    equity                                  $48,238                       $38,046                       $32,125
                                            =======                       =======                       =======
Excess of interest-earning assets over
 interest-bearing liabilities               $ 8,852                       $ 8,137                       $ 6,488
                                            =======                       =======                       =======
Ratio of interest-earning assets to
 interest-bearing liabilities                125.90%                       132.01%                       130.36%
                                            =======                       =======                       =======
Net interest income                                   $2,241                        $1,897                        $1,581
                                                      ======                        ======                        ======
Net interest spread                                              4.14%                         4.44%                         4.79%
                                                                =====                         =====                         =====
Net interest yield on interest earning 
 assets                                                          5.21%                         5.65%                         5.67%
                                                                =====                         =====                         =====
</TABLE> 

(1) Non-accrual loans and the interest income which was recorded on these loans 
(both prior and subsequent to the time the loans were placed on non-accrual 
status, if any) are included in the yield calculation for loans in all periods 
reported.

<PAGE>

TABLE 2
 
VOLUME RATE ANALYSIS

The following table shows a summary of the changes in interest and income
expense resulting from changes in volume and changes in rates for each major
category of interest-earning assets and interest-bearing liabilities for 1996
over 1995, and 1995 over 1994.

<TABLE> 
<CAPTION> 
                                                  1996 OVER 1995                               1995 OVER 1994
                                                  --------------                               --------------
                                      INCREASE (DECREASE) DUE TO CHANGES IN:       INCREASE (DECREASE) DUE TO CHANGES IN:
                                      VOLUME            RATE           TOTAL       VOLUME            RATE           TOTAL
                                      --------------------------------------       --------------------------------------
<S>                                   <C>               <C>            <C>         <C>               <C>            <C> 
Interest income on:                   $                                            $
  Loans (including loan fees)          545               (26)           519         389               202            591
  Investment securities:
    Taxable                            145                95            240          41                26             67
    Nontaxable                          76                 4             80           3                 4              7
  Federal funds sold                    22               (18)             4          56                51            107
                                      -------------------------------------        -------------------------------------
      Total interest-earning assets    788                55            843         489               283            772

Interest expense on:
  Deposits:
    Interest bearing demand and 
     savings                            50                14             64          11                (6)             6
    Time                               400                17            417         181               267            448
  Other borrowings                      19                (1)            18           1                 2              3
                                      -------------------------------------        -------------------------------------
      Total interest bearing 
       liabilities                    $469                30            499        $193               263            456
                                      =====================================        -------------------------------------
</TABLE> 

Rate/volume variances are allocated between rate variances and volume variances 
using a weighted average allocation method.

TABLE 3

INVESTMENT PORTFOLIO

The following table presents the book value and market value of investments by 
category at December 31, 1996 and 1995.

<TABLE> 
<CAPTION> 
                                         1996                   1995
                                 -------------------------------------------
                                   BOOK        MARKET      BOOK       MARKET
                                 -------------------------------------------
<S>                              <C>          <C>         <C>         <C> 
U.S. Treasury                    $ 1,348      $ 1,363     $3,290      $3,302
U.S. Government Agencies           5,880        5,862      4,577       4,620
State, county and municipal        2,743        2,735      1,160       1,159
Mortgage-backed Securities         1,810        1,798        461         470
                                 -------------------------------------------
                                 $11,781      $11,758     $9,488      $9,551
                                 ===========================================

                                                                     WEIGHTED
                                   U.S.         U.S.                 AVERAGE
MATURITIES AT DECEMBER 31,1996   TREASURY     AGENCIES      SCM       YIELDS
------------------------------   --------------------------------------------
Within 1 year                    $   451           --         --       5.34%
After 1 through 5 years              897        1,697        855       5.73%
After 5 through 10 years              --        4,183      1,173       6.93%
After 10 years                        --           --        715       5.19%
                                 -------------------------------------------
  Totals                         $ 1,348        5,880      2,743       6.32%
                                 ===========================================
</TABLE> 
<PAGE>

TABLE 4

LOAN PORTFOLIO

The following table presents loans by type at the end of each of the last two 
years:

                                               1996         1995
                                             --------------------
Commercial, financial and agricultural       $19,552      $10,468
Real estate--construction                      3,117        2,239
Real estate--mortgage                          6,345        7,430
Installment loans to individuals               3,678        2,641
                                             --------------------
                                             $32,692      $22,778
                                             ====================

As of December 31, 1996, maturities of loans in the indicated classifications 
were as follows:

                              COMMERCIAL
                             FINANCIAL AND    REAL ESTATE 
MATURITY                     AGRICULTURAL     CONSTRUCTION    TOTAL
--------                     -------------    ------------    -----
Within 1 year                  $ 3,768           $1,556      $ 5,324
1 to 5 years                    14,079            1,561       15,640
After 5 years                    1,705               --        1,705
                               -------           ------      -------
                               $19,552           $3,117      $22,669
                               =======           ======      =======

As of December 31, 1996, the interest terms of loans in the indicated 
classifications for the indicated maturity ranges are as follows:

                                            FIXED      VARIABLE
                                           INTEREST    INTEREST
                                            RATES        RATES     TOTAL
                                           --------    --------    -----
Commercial, financial and agricultural:
  1 to 5 years maturity                     $4,674        9,405    14,079
  After 5 years maturity                       495        1,210     1,705
                                            ------       ------    ------
                                             5,169       10,615    15,784
Real estate--construction:
  1 to 5 years maturity                        120        1,441     1,561
  After 5 years maturity                        --           --        --
                                            ------       ------    ------
                                               120        1,441     1,561
                                            ------       ------    ------
                                            $5,289       12,056    17,345
                                            ======       ======    ======

The following summarizes past due and non-accrual loans, other real estate, and 
interest that would have been and has been reported on non-accrual loans as of 
December 31, 1996 and 1995.

                                              1996         1995
                                              ----         ----
Other real estate                              379           --
Accruing loans 90 days or more past due         --           --
Non-accrual loans                              184          164

A loan is placed on non-accrual status when, in management's judgment, the 
collection of interest appears doubtful. As a result of management's ongoing 
review of the loan portfolio, loans as classified as non-accrual generally when 
they are past due in principal or interest payments for more than 90 days or it 
is otherwise not reasonable to expect collection of principal and interest under
the original terms. Exceptions are allowed for 90 day past due loans when such 
loans are well secured and in process of collection.

<PAGE>

TABLE 5

ALLOWANCE FOR LOAN LOSSES

                                                         1996       1995
                                                         ---------------
Balance at beginning of year                            $ 386      $ 400
Charge-offs:
  Commercial, financial and agricultural                  175         36
  Real estate                                              --         --
  Installment loans to individuals                         35         89
                                                        ----------------
                                                          210        125
                                                        ----------------
Recoveries:
  Commercial, financial and agricultural                   32         13
  Real Estate                                              --         --
  Installment loans to individuals                         17          3
                                                        ----------------
                                                           49         16
                                                        ----------------
Net charge-offs                                           161        109

Additions charged to operations                           140         95
                                                        ----------------
Balance at end of year                                  $ 365      $ 386
                                                        ================
Ratio of net charge-offs during the period to
 average loans outstanding during the period             0.59%      0.48%
                                                        ================

Management's policy is to perform an annual review of the Bank's loan portfolio.
As a result of this review and management's ongoing monitoring efforts, each
loan is assigned a risk rating based upon the borrower's ability to repay, the
underlying collateral, the economic conditions and other factors relevant to the
loan. The allowance for loan losses is provided based upon the risk ratings
assigned or specific losses identified. An assessment of the adequacy of the
allowance for loan losses is made quarterly based upon the loan ratings and the
composition and growth of the loan portfolio.

TABLE 6

DEPOSITS

The average balance of deposits and the average rates paid on such deposits are 
summarized for the periods indicated in the following table:

<TABLE> 
<CAPTION> 

                                     1996                     1997
                            ----------------------    -------------------
                              Amount       Rate         Amount     Rate
                            ----------------------    -------------------
<S>                         <C>          <C>          <C>         <C> 
Demand deposits:            $  8,321            -     $  7,066         -
  Non-interest bearing  
  Interest-bearing demand
     and savings               8,641         3.09%       6,971      2.91%
  Time deposits               25,281         5.87%      18,414      5.79%
                             --------                  ------- 
                            $ 42,243                  $ 32,451
                             ========                  =======
</TABLE> 
Maturities of time certificates of deposit of $100,000 or more outstanding at 
December 31, 1996 are summarized as follows:

<TABLE> 
<S>                         <C> 
Within 3 months             $  4,610
After 3 through 6 months         793
After 6 through 12 months        502
After 12 months                4,067
                             -------
                            $  9,972
                             =======
</TABLE> 

TABLE 7

SELECTED RATIOS

The following table sets out certain ratios of the consolidated entity for the 
years indicated:

<TABLE> 
<CAPTION> 
                                      1996      1995
                                  ------------------
<S>                               <C>        <C>  
Net income to:                        
  Average stockholders' equity       5.58%     6.01%
  Average assets                     0.63%     0.81%
Dividends to net income              8.61%       -
Average equity to average assets    11.23%    13.55%  
</TABLE> 
<PAGE>
 
                           SUPERVISION AND REGULATION

          The following discussion sets forth the material elements of the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to the Company.

GENERAL

          The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the Bank
Holding Company Act of 1956, as amended (the "BHC Act").  As such, the Company
and its non-bank subsidiary are subject to the supervision, examination, and
reporting requirements of the BHC Act and the regulations of the Federal
Reserve.

          The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before:  (a) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5% of the voting shares of the bank; (b) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (c) it may merge or consolidate with any other bank
holding company.

          The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served.  The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served.  Consideration of financial resources generally focuses on capital
adequacy, which is discussed below.

          The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks by
bank holding companies, such that the Company, and any other bank holding
company located in Georgia may now acquire a bank located in any other state,
and any bank holding company located outside Georgia may lawfully acquire any
Georgia-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage, aging requirements, and other
restrictions.  The Interstate Banking Act also generally provides that, after
June 1, 1997, national and state-chartered banks may branch interstate through
acquisitions of banks in other states.  By adopting legislation prior to that
date, a state has the ability either to "opt in" and accelerate the date after
which interstate branching is permissible or "opt out" and prohibit interstate
branching altogether.

          In February 1996, the Georgia Legislature adopted the "Georgia
Interstate Branching Act" effective June 1, 1997.  The Georgia Interstate
Banking Act will permit Georgia-based banks and 
<PAGE>
 
bank holding companies owning or acquiring banks outside of Georgia and all non-
Georgia banks and bank holding companies owning or acquiring banks in Georgia to
merge any lawfully acquired bank into an interstate branch network. The Georgia
Interstate Branching Act also allows banks to establish de novo branches on a
limited basis beginning July 1, 1996. Beginning July 1, 1998, the number of de
novo branches which may be established will no longer be limited.

          The BHC Act generally prohibits the Company from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.  In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.  For example,
factoring accounts receivable, acquiring or servicing loans, leasing personal
property, conducting discount securities brokerage activities, performing
certain data processing services, acting as agent or broker in selling credit
life insurance and certain other types of insurance in connection with credit
transactions, and performing certain insurance underwriting activities all have
been determined by the Federal Reserve to be permissible activities of bank
holding companies.  The BHC Act does not place territorial limitations on
permissible non-banking activities of bank holding companies.  Despite prior
approval, the Federal Reserve has the power to order a holding company or its
subsidiaries to terminate any activity or to terminate its ownership or control
of any subsidiary when it has reasonable cause to believe that continuation of
such activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.

          The bank subsidiary of the Company is a member of the Federal Deposit
Insurance Corporation (the "FDIC"), and as such, its deposits are insured by the
FDIC to the maximum extent provided by law.  Each such subsidiary is also
subject to numerous state and federal statutes and regulations that affect its
business, activities, and operations, and each is supervised and examined by one
or more state or federal bank regulatory agencies.

          The FDIC and the Georgia Department of Banking and Finance (the
"Georgia Department") regularly examine the operations of the subsidiary banks
and are given authority to approve or disapprove mergers, consolidations, the
establishment of branches, and similar corporate actions.  The FDIC and the
Georgia Department also have the power to prevent the continuance or development
of unsafe or unsound banking practices or other violations of law.

PAYMENT OF DIVIDENDS

          The Company is a legal entity separate and distinct from its banking
and other subsidiaries.  The principal sources of cash flow of the Company,
including cash flow to pay dividends to its shareholders, are dividends by its
subsidiary bank.  There are statutory and regulatory limitations on the payment
of dividends by the subsidiary bank to the Company as well as by the Company to
its shareholders.
<PAGE>
 
          If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such institution cease and desist
from such practice.  The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice.  Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized.  See "-- Prompt
Corrective Action."  Moreover, the federal agencies have issued policy
statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.

          The payment of dividends by the Company and the subsidiary bank may
also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.

CAPITAL ADEQUACY

          The Company and its subsidiary bank are required to comply with the
capital adequacy standards established by the Federal Reserve and the
appropriate federal banking regulator in the case of its banking subsidiary.
There are two basic measures of capital adequacy for bank holding companies that
have been promulgated by the Federal Reserve:  a risk-based measure and a
leverage measure.  All applicable capital standards must be satisfied for a bank
holding company to be considered in compliance.

          The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets.  Assets and off-balance-sheet
items are assigned to broad risk categories, each with appropriate weights.  The
resulting capital ratios represent capital as a percentage of total risk-
weighted assets and off-balance-sheet items.

          The minimum guideline for the ratio (the "Total Risk-Based Capital
Ratio") of total capital ("Total Capital") to risk-weighted assets (including
certain off-balance-sheet items, such as standby letters of credit) is 8%.  At
least half of Total Capital must comprise common stock, minority interests in
the equity accounts of consolidated subsidiaries, noncumulative perpetual
preferred stock, and a limited amount of cumulative perpetual preferred stock,
less goodwill and certain other intangible assets ("Tier 1 Capital").  The
remainder may consist of subordinated debt, other preferred stock, and a limited
amount of loan loss reserves ("Tier 2 Capital").  At December 31, 1996, the
Company's consolidated Total Risk-Based Capital Ratio and its Tier 1 Risk-Based
Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were
16% and 15%, respectively.

          In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies.  These guidelines provide for a
minimum ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less
goodwill and certain other intangible assets, of 3% for bank holding 
<PAGE>
 
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3%, plus an additional cushion of 100 to
200 basis points. The Company's Leverage Ratio at December 31, 1996 was 11%. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the Federal Reserve has indicated that it
will consider a "tangible Tier 1 Capital Leverage Ratio" (deducting all
intangibles) and other indicia of capital strength in evaluating proposals for
expansion or new activities.

          The Bank is subject to risk-based and leverage capital requirements
adopted by its federal banking regulator, which are substantially similar to
those adopted by the Federal Reserve for bank holding companies.

          The Bank was in compliance with applicable minimum capital
requirements as of December 31, 1996.  The Company has not been advised by any
federal banking agency of any specific minimum capital ratio requirement
applicable to it or its subsidiary depository institutions.

          Failure to meet capital guidelines could subject a bank to a variety
of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business.  As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements.  See
"-- Prompt Corrective Action."

          The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels.  In this regard, the Federal Reserve and the FDIC have, pursuant to
FDICIA, recently adopted final regulations, which will become mandatory on
January 1, 1998, requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance-sheet position)  in the
evaluation of a bank's capital adequacy.  The bank regulatory agencies have
concurrently proposed a methodology for evaluating interest rate risk which
would require banks with excessive interest rate risk exposure to hold
additional amounts of capital against such exposures.  The market risk rules
will apply to any bank or bank holding company whose trading activity equals 10%
or more of its total assets, or whose trading activity equals $1 billion or
more.

SUPPORT OF SUBSIDIARY INSTITUTIONS

          Under Federal Reserve policy, the Company is expected to act as a
source of financial strength for, and to commit resources to support, its
banking subsidiary,  This support may be required at times when, absent such
Federal Reserve policy, the Company may not be inclined to provide it.  In
addition, any capital loans by a bank holding company to any of its banking
subsidiaries are subordinate in right of payment to deposits and to certain
other indebtedness of such banks.  In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
<PAGE>
 
          Under the Federal Deposit Insurance Act ("FDIA"), a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (a) the default of a commonly controlled FDIC-insured depository
institution or (b) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or receiver,
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance.  The FDIC's claim for damages is superior to claims of
shareholders of the insured depository institution or its holding company, but
is subordinate to claims of depositors, secured creditors, and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution.  The subsidiary depository institutions of the Company
are subject to these cross-guarantee provisions.  As a result, any loss suffered
by the FDIC in respect of these subsidiaries would likely result in assertion of
the cross-guarantee provisions, the assessment of such estimated losses against
the depository institution's banking affiliates, and a potential loss of the
Company's investment in such other subsidiary depository institutions.

PROMPT CORRECTIVE ACTION

          FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions.  Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed.  Generally, subject to
a narrow exception, FDICIA requires the banking regulator to appoint a receiver
or conservator for an institution that is critically undercapitalized.  The
federal banking agencies have specified by regulation the relevant capital level
for each category.

          The capital levels established for each of the categories are as
follows:
<PAGE>
 
<TABLE>
<CAPTION>
                                                         Total            Tier 1 Risk-   
   Capital Category             Tier 1 Capital     Risk-Based Capital     Based Capital          Other
   ----------------             --------------     ------------------     -------------          -----
<S>                             <C>                <C>                    <C>                <C>
Well Capitalized                  5% or more         10% or more           6% or more        Not subject to
                                                                                             a capital
                                                                                             directive
                                                                                         
Adequately Capitalized            4% or more         8% or more            4% or more             --
                                                                                         
Undercapitalized                  less than 4%       less than 8%          less than 4%           --
                                                                                         
Significantly                     less than 3%       less than 6%          less than 3%           --
  Undercapitalized                                                                       
                                                                                         
Critically Undercapitalized       2% or less                --                    --              --
                                  tangible equity
</TABLE>

          For purposes of the regulation, the term "tangible equity" includes
core capital elements counted as Tier 1 Capital for purposes of the risk-based
capital standards, plus the amount of outstanding cumulative perpetual preferred
stock (including related surplus), minus all intangible assets with certain
exceptions.  A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.

          An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to certain limitations.
The obligation of a controlling holding company under FDICIA to fund a capital
restoration plan is limited to the lesser of 5% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements.  An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC.  In
addition, the appropriate federal banking agency is given authority with respect
to any undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.

FDIC INSURANCE ASSESSMENTS

          Pursuant to FDICIA, the FDIC adopted a new risk-based assessment
system for insured depository institutions that takes into account the risks
attributable to different categories and concentrations of assets and
liabilities.  The new system, which went into effect on January 1, 1994, assigns
an institution to one of three capital categories:  (a) well capitalized; (b)
adequately capitalized; and (c) undercapitalized.  These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective 
<PAGE>
 
action purposes. An institution is also assigned by the FDIC to one of three
supervisory subgroups within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the institution's primary federal regulator and information which
the FDIC determines to be relevant to the institution's financial condition and
the risk posed to the deposit insurance funds (which may include, if applicable,
information provided by the institution's state supervisor). An institution's
insurance assessment rate is then determined based on the capital category and
supervisory category to which it is assigned. Under the final risk-based
assessment system, as well as the prior transitional system, there are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Assessment rates for members of both the Bank Insurance Fund ("BIF") and the
Savings Association Insurance Fund ("SAIF") for the first half of 1995, as they
had during 1994, ranged from 23 basis points (0.23% of deposits) for an
institution in the highest category (i.e., "well capitalized" and "healthy") to
31 basis points (0.31% of deposits) for an institution in the lowest category
(i.e., "undercapitalized" and "substantial supervisory concern"). These rates
were established for both funds to achieve a designated ratio of reserves to
insured deposits (i.e., 1.25%) within a specified period of time.

          Once the designated ratio for the BIF was reached in May 1995, the
FDIC reduced the assessment rate applicable to BIF deposits in two stages, so
that, beginning 1996, the deposit insurance premiums for 92% of all BIF members
in the highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size.  The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.

          Recognizing that the disparity between the SAIF and BIF premium rates
had adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, on July 28, 1995, the FDIC,
the Treasury Department, and the Office of Thrift Supervision released
statements outlining a proposed plan to recapitalize the SAIF, the principal
feature of which was a special one-time assessment on depository institutions
holding SAIF-insured deposits, which was intended to recapitalize the SAIF at a
reserve ratio of 1.25%.  This proposal contemplated elimination of the disparity
between the assessment rates on BIF and SAIF deposits following recapitalization
of the SAIF.

          A variation of this proposal designated the Deposit Insurance Funds
Act of 1996 (the "Funds Act") was enacted by Congress as part of the omnibus
budget legislation and signed into law on September 30, 1996.  As directed by
the Funds Act, the FDIC implemented a special one-time assessment of
approximately 65.7 basis points (0.657%) on a depository institution's SAIF-
insured deposits held as of March 31, 1995 (or approximately 52.6 basis points
on SAIF deposits acquired by banks in certain  qualifying transactions).

          In addition, the FDIC proposed a revision in the SAIF assessment rate
schedule that effected, as of October 1, 1996 (a) a widening in the assessment
rate spread among institutions in the different capital and risk assessment
categories, (b) an overall reduction of the assessment rate range assessable on
SAIF deposits of from 0 to 27 basis points, and (c) a special interim assessment
rate range for the last quarter of 1996 of from 18 to 27 basis points on
institutions subject to FICO assessments.  Effective January 1, 1997, FICO
assessments will be imposed on both BIF- and SAIF-insured deposits in annual
amounts presently estimated at 1.29 basis points and 6.44 basis points,
respectively.  Beginning in January, 2000, BIF- and SAIF- insured institutions
will share the FICO interest costs at equal rates currently estimated 2.43 basis
points.  The Company anticipates that the net effect of the decrease in the
premium assessment 
<PAGE>
 
rate on SAIF deposits will result in a reduction in its total deposit insurance
premium assessments for the years 1997 through 1999, assuming no further changes
in announced premium assessment rates. The Funds Act further provides that BIF
and SAIF are to be merged, creating the "Deposit Insurance Fund," on January 1,
1999, provided that bank and savings association charters are combined by that
date.

          Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.

                   PROPOSED LEGISLATION AND REGULATORY ACTION

          New regulations and statutes are regularly proposed which contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions.  It cannot be predicted
whether or what form any proposed regulation or statute will be adopted or the
extent to which the business of the Company may be affected by such regulation
or statute.
<PAGE>
 
                                    PART II

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS


          The responses to this item are included in the Company's Amended
Annual Report to Shareholders under the heading, "Management's Discussion and
Analysis," and are incorporated herein by reference.


ITEM 7.   FINANCIAL STATEMENTS

          The following financial statements are included in the Company's
Amended Annual Report to Shareholders and are hereby incorporated herein by
reference:

              Report of Independent Certified Public Accountants

              Financial Statements
                 Consolidated Balance Sheets dated as of December 31, 1996 and
                  1995
                 Consolidated Statements of Earnings for the years ended
                  December 31, 1996, 1995 and 1994
                 Consolidated Statements of Changes in Stockholders' Equity for
                  the years ended December 31, 1996, 1995 and 1994
                 Consolidated Statements of Cash Flows for the years ended
                  December 31, 1996, 1995 and 1994
                 Notes to Consolidated Financial Statements
<PAGE>
 
ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K

     (a)   Exhibits

Exhibit
Number            Exhibit
------            -------
13.1        The Company's Amended 1996 Annual Report to Shareholders 
            (incorporated by reference into Item 7 of this Annual
            Report on Form 10-KSB/A).  Except with respect to those 
            portions specifically incorporated by reference herein, the
            Company's Amended 1996 Annual Report to Shareholders is not 
            deemed to be filed as part of this Report.
     
<PAGE>
 
                                   SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) 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.

 
                                      FIRST SOUTHERN BANCSHARES, INC.
              
              
              
                                      By:  /s/ James E. Young
                                         --------------------
                                          James E. Young
                                          President
              
              
                                      Date: October 17, 1997
                                            ----------------


          Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


     Signature                    Title                      Date
     ---------                    -----                      ----
                                                       
                                                       
/s/ Gregory T. Baranco      Chairman of the Board       October 17, 1997
-----------------------                                                 
Gregory T. Baranco                                     
                                                       
                                                       
/s/ Bernard H. Bronner      Director                    October 17, 1997
-----------------------                                                 
Bernard H. Bronner                                     
                                                       
                                                       
/s/ Robert L. Brown         Director                    October 17, 1997
--------------------                                                    
Robert L. Brown                                        
                                                       
                                                       
/s/ William H. Cleveland    Director                    October 17, 1997
-------------------------                                               
William H. Cleveland                                   
                                                       
                                                       
/s/ Robert McMahan          Director                    October 17, 1997
-------------------                                                     
Robert McMahan                                         
<PAGE>
 
/s/ C. David Moody          Director                    October 17, 1997
-------------------                                                     
C. David Moody                                         
                                                       
                                                       
/s/ Lynn Pattillo           Director                    October 17, 1997
------------------                                                      
Lynn Pattillo                                          
                                                       
                                                       
/s/ Thom Peters             Director                    October 17, 1997
----------------                                                        
Thom Peters                                            
                                                       
                                                       
/s/ Porter Sanford          Director                    October 17, 1997
-------------------                                                     
Porter Sanford                                         
                                                       
                                                       
/s/ James E. Young          Director and President      October 17, 1997
------------------                                                      
James E. Young*                                        
                                                       
                                                       
/s/ Willard C. Lewis        Executive Vice President    October 17, 1997
--------------------
Willard C. Lewis**
 

By:  /s/ Willard C. Lewis
    ----------------------
   Willard C. Lewis
   Attorney-in-fact


*   Principal executive officer
**  Principal Accounting and Financial Officer
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------
 
Exhibit
Number         Exhibit
-------        -------                 
 
 13.1          The Company's Amended 1996 Annual Report to Shareholders
               (incorporated by reference into Item 7 of this Annual Report on
               Form 10-KSB/A).  Except with respect to those portions
               specifically incorporated by reference herein, the Company's
               Amended 1996 Annual Report to Shareholders is not deemed to be
               filed as part of this Report.