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                             FIRST SOUTHERN BANCORP






                               2004 ANNUAL REPORT


<PAGE>
                             FIRST SOUTHERN BANCORP

                                Table of Contents


                                                             Page
                                                             ----

Selected Financial Data . . . . . . . . . . . . . . . . . . .   2
Management's Discussion and Analysis of Financial Condition
  and Results of Operations . . . . . . . . . . . . . . . . .   3
Report of Independent Registered Public Accounting Firm . . .  14
Consolidated Financial Statements . . . . . . . . . . . . . .  15
Notes to Consolidated Financial Statements. . . . . . . . . .  20
Corporate and Shareholder Information . . . . . . . . . . . .  32

CORPORATE  INFORMATION

First  Southern  Bancorp,  a Georgia  Corporation (the  "Company"), is a holding
company engaged in commercial banking primarily in Bulloch County, Georgia.  The
Company currently has one subsidiary, First Southern National Bank (the "Bank"),
which  is  active  in  retail  and  commercial  banking.

There  is  no  established public trading market for the Company's Common Stock.
As  of  March  15,  2005,  the  Company  had  662  shareholders  of  record.

It  is the policy of the Board of Directors to reinvest earnings for such period
of time as is necessary to ensure the operation of the Company.  The Company has
no  current  plans  to  initiate  dividends, and the future dividend policy will
depend  on the Company's earnings, capital requirements, financial condition and
other factors considered relevant by the Board of Directors of the Company.  The
Company  declared  no  dividends  in  2004  and is not expected to do so for the
foreseeable  future.  Information  on  restrictions  on  the amount of dividends
payable  by the Company and the Bank appears in Note 12 to the Company's audited
financial  statements.


<PAGE>
                             FIRST SOUTHERN BANCORP

                            SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                           2004         2003         2002

FOR THE YEAR
<S>                                    <C>           <C>          <C>
    Net interest income                $ 2,858,961    1,705,535      724,802
    Provision for loan losses              404,865      324,390      375,000
    Noninterest income                     606,769      467,128      217,650
    Noninterest expense                  2,567,230    2,153,070    1,533,875
    Net earnings(loss)                 $   943,453     (304,797)    (966,423)

PER COMMON SHARE
    Basic earnings(loss)               $      1.02        (0.33)       (1.05)
    Diluted earnings(loss)                    1.02        (0.33)       (1.05)
    Cash dividends declared                      -            -            -
    Book value                         $      9.10         8.09         8.45

AT YEAR END
    Loans, net                         $70,251,586   44,876,389   23,772,372
    Earning assets                      86,034,552   57,614,117   28,769,761
    Assets                              96,069,398   63,290,834   31,913,765
    Deposits                            84,274,191   55,674,666   24,063,029
    Shareholders' equity               $ 8,381,121    7,449,548    7,768,369
    Common shares outstanding              920,547      920,547      919,547

AVERAGE BALANCES
    Loans                              $60,357,925   34,843,677   10,625,401
    Earning assets                      69,821,200   41,305,997   15,898,866
    Assets                              74,539,221   46,113,806   18,024,602
    Deposits                            64,404,123   38,251,452   10,478,073
    Shareholders' equity               $ 7,915,334    7,608,959    8,058,708
    Weighted average shares
      outstanding                          920,547      919,847      919,547

KEY PERFORMANCE RATIOS
    Return on average assets                  1.27%      (0.66%)      (5.93%)
    Return on average shareholders'
      equity                                 11.92%      (4.01%)     (13.26%)
    Net interest margin                       4.09%        4.13%        4.07%
    Dividend payout ratio                        -            -            -
    Average equity to average assets         10.62%       16.50%       44.71%
</TABLE>


                                        2
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

                                     GENERAL

First  Southern  Bancorp  is a bank holding company headquartered in Statesboro,
Georgia  organized  to own all of the common stock of its bank subsidiary, First
Southern  National  Bank.  The  principal  activity  of  the  bank is to provide
banking  services  to  domestic markets, principally in Bulloch County, Georgia.
The  bank  is  primarily  regulated  by  the  Office  of  the Comptroller of the
Currency("OCC")  and  undergoes periodic examinations by this regulatory agency.
Our  bank  holding  company is regulated by the Federal Reserve Bank and also is
subject  to  periodic  examinations.

The  following  discussion  describes  our  results  of  operations  for 2004 as
compared  to  2003  and also analyzes our financial condition as of December 31,
2004  as  compared  to  December 31, 2003.  Like most community banks, we derive
most  of  our income from interest we receive on our loans and investments.  Our
primary sources of funds for making these loans and investments are our deposits
and  Federal Home Loan Bank borrowings, on which we pay interest.  Consequently,
one  of the key measures of our success is our amount of net interest income, or
the  difference between the income on our interest-earning assets, such as loans
and  investments,  and  the expense on our interest-bearing liabilities, such as
deposits.  Another  key measure is the spread between the yield we earn on these
interest-earning assets and the rate we pay on our interest-bearing liabilities.

We  have  included  a  number  of  tables  to assist in our description of these
measures.  For  example,  the "Average Balances" table shows the average balance
during  2004 and 2003 of each category of our assets and liabilities, as well as
the yield we earned or the rate we paid with respect to each category.  A review
of this table shows that our loans typically provide higher interest yields than
do  other  types of interest earning assets, which is why we intend to channel a
substantial  percentage  of  our  earning  assets  into  our  loan  portfolio.
Similarly,  the  "Rate/Volume  Analysis"  table  helps demonstrate the impact of
changing interest rates and changing volume of assets and liabilities during the
years  shown.  We also track the sensitivity of our various categories of assets
and  liabilities  to  changes  in  interest  rates,  and  we  have  included  a
"Sensitivity  Analysis Table" to help explain this.  Finally, we have included a
number of tables that provide detail about our investment securities, our loans,
and  our  deposits.

Of  course,  there  are risks inherent in all loans, so we maintain an allowance
for  loan  losses  to  absorb  possible losses on existing loans that may become
uncollectible.  We establish and maintain this allowance by charging a provision
for  loan  losses  against our operating earnings.  In the following section, we
have  included  a detailed discussion of this process, as well as several tables
summarizing  information  concerning  the  allowance  for  loan  losses.

In  addition  to  earning  interest on our loans and investments, we earn income
through  fees  and  other  expenses we charge to our customers.  We describe the
various  components  of  this  noninterest  income,  as  well as our noninterest
expense,  in  the  following  discussion.

The  following  discussion and analysis also identifies significant factors that
have  affected  our  financial position and operating results during the periods
included  in  the  accompanying  financial statements.  We encourage you to read
this  discussion  and  analysis in conjunction with the financial statements and
the  related  notes  and the other statistical information also included in this
report.

                           FORWARD-LOOKING STATEMENTS

This  Report  contains  statements  which  constitute forward-looking statements
within  the  meaning  of  Section  27A  of  the  Securities  Act of 1933 and the
Securities  Exchange Act of 1934. These statements are based on many assumptions
and  estimates and are not guarantees of future performance.  Our actual results
may differ materially from those projected in any forward-looking statements, as
they  will  depend  on  many  factors  about which we are unsure, including many
factors  which  are  beyond  our  control.  The  words "may,"  "would," "could,"
"will,"  "expect," "anticipate," "believe," "intend," "plan," and "estimate," as
well  as  similar  expressions,  are  meant  to  identify  such  forward-looking
statements.  Potential  risks and uncertainties include, but are not limited to:

     -    significant  increases  in  competitive  pressure  in  the banking and
          financial services industries;
     -    changes  in  the  interest  rate  environment  which  could  reduce
          anticipated or actual margins;
     -    changes  in  political  conditions  or  the  legislative or regulatory
          environment;
     -    general  economic  conditions,  either  nationally  or  regionally and
          especially  in  our primary service area, becoming less favorable than
          expected  resulting  in, among other things, a deterioration in credit
          quality;
     -    changes occurring in business conditions and inflation;


                                        3
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

     -    changes in technology;
     -    changes in monetary and tax policies;
     -    the level of allowance for loan loss;
     -    the rate of delinquencies and amounts of charge-offs;
     -    the rates of loan growth;
     -    adverse  changes  in  asset  quality  and  resulting  credit
          risk-related losses and expenses;
     -    loss  of  consumer  confidence  and  economic  disruptions  resulting
          from terrorist activities;
     -    changes in the securities markets; and
     -    other  risks  and  uncertainties  detailed  from  time  to time in our
          filings with the Securities and Exchange Commission.

                          CRITICAL ACCOUNTING POLICIES

We  have  adopted  various  accounting policies, which govern the application of
accounting  principles generally accepted in the United States of America in the
preparation  of  our  financial statements.  Our significant accounting policies
are  described  in  note  1  in  the  footnotes  to  the  consolidated financial
statements  at  December  31,  2004  included  elsewhere  in this annual report.

We  believe  that  the allowance for loan losses is a critical accounting policy
that  requires  the most significant judgments and estimates used in preparation
of  our  consolidated  financial  statements.  Please  refer  to  the portion of
management's  discussion  and  analysis  of  financial  condition and results of
operations that addresses the allowance for loan losses for a description of our
processes  and  methodology  for  determining  the  allowance  for  loan losses.

                              RESULTS OF OPERATIONS
OVERVIEW

Net  income  for 2004 was $943,453, or $1.02 per common share, compared to a net
loss  for  2003  of $304,797, or $0.33 per common share.  Our net income in 2004
included an income tax benefit of approximately $450,000, which was due in large
part  to  the reversal of a valuation allowance on our deferred tax assets.  Our
operational  results  depend  to a large degree on net interest income, which is
the  difference  between  the  interest income received from investments(such as
loans,  investment  securities,  federal  funds  sold,  etc.)  and  the interest
expense,  which  is  paid  on deposits and Federal Home Loan Bank advances.  Net
interest  income was $2,858,961 for the year ended December 31, 2004 compared to
$1,705,535  for  the  year  ended  December  31,  2003.

The provision for loan losses in 2004 was $404,865 compared to $324,390 in 2003.
The provision for loan losses reflects management's estimate of potential losses
inherent  in the loan portfolio and the creation of an allowance for loan losses
adequate  to  absorb  such  losses.

Other  operating  income  for the year ended December 31, 2004 totaled $606,769,
representing  a  $139,641(30%) increase from December 31, 2003.  Other operating
income  includes  services  charges on deposit accounts and mortgage origination
fee  income.  An  increase  in  the  number  of  deposits  allowed  us to derive
significant  income  from  service charges, while rising interest rates caused a
reduction  in  income  recognized from the origination of mortgage loans.  Other
operating  expenses  in  2004 were $2,567,230, a $414,160(19%) increase compared
with  the  2003  amount,  due  to  increases  in  data processing expense, which
increased  as  the  number  of transactions increased.  The largest component of
other  operating expenses is salaries and benefits, which totaled $1,182,704 for
the  year  ended  December  31,  2004.

In  2004, we recognized an income tax benefit of $449,818 due to the reversal of
the  valuation  allowance  related  to  our  deferred  tax  asset.  In  2003, we
recognized  no  income  tax  benefit  due to the fact that realization of such a
benefit  was  dependent  upon  future  earnings  of  our  company.


                                        4
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

NET  INTEREST  INCOME

For  the  year  ended  December 31, 2004, net interest income totaled $2,858,961
compared  to $1,705,535 for the same period in 2003.  Interest income from loans
including  fees was $3,750,598, representing a yield of 6.21%.  Interest expense
totaled  $1,112,081 for the year ended December 31, 2004 compared to $641,888 in
2003.  The  net interest margin realized on earning assets and the interest rate
spread were 4.09% and 3.86%, respectively, for the year ended December 31, 2004.
For  the  year  ended  December  31,  2003,  the net interest margin realized on
earning  assets and the interest rate spread were 4.13% and 3.79%, respectively.

AVERAGE BALANCES AND INTEREST RATES

The  table  below  shows  the  average  balance outstanding for each category of
interest  earning assets and interest-bearing liabilities for 2004 and 2003, and
the average rate of interest earned or paid thereon.  Average balances have been
derived  from  the  daily  balances  throughout  the  period  indicated.

<TABLE>
<CAPTION>
                                                    December 31, 2004                   December 31, 2003
                                                  ---------------------               ---------------------
                                              Average                 Yield/      Average                Yield/
                                              Balance     Interest     Rate       Balance    Interest     Rate
                                           -------------  ---------  ---------  -----------  ---------  ---------
<S>                                        <C>            <C>        <C>        <C>          <C>        <C>
Assets:
  Interest earning assets:
    Loans(including loan fees)             $ 60,357,925   3,750,598      6.21%  34,843,677   2,216,948      6.36%
    Investment securities                     6,272,816     169,400      2.70%   4,824,313     105,772      2.19%
    Federal funds sold                        3,190,459      51,044      1.60%   1,638,007      24,703      1.51%
                                           -------------  ---------  ---------  -----------  ---------  ---------

  Total interest earning assets              69,821,200   3,971,042      5.69%  41,305,997   2,347,423      5.68%
                                                          ---------                          ---------  ---------
  Other non-interest earning assets           4,718,021                          4,807,809
                                           -------------                        -----------

        Total assets                       $ 74,539,221                         46,113,806
                                           =============                        ===========

Liabilities and shareholders' equity:
  Interest-bearing liabilities:
    Deposits:
      Interest-bearing demand              $ 22,652,229     296,849      1.31%  13,270,875     149,950      1.13%
      Savings                                 1,802,578       8,901      0.49%   1,275,546       8,495      0.67%
      Time                                   34,223,293     783,396      2.29%  19,249,441     480,601      2.50%
    Federal Home Loan Bank advances           1,608,302      18,790      1.17%           -           -         -
    Other                                       375,984       4,145      1.10%     118,339       2,842      2.40%
                                           -------------  ---------  ---------  -----------  ---------  ---------

        Total interest-bearing
          liabilities                        60,662,386   1,112,081      1.83%  33,914,201     641,888      1.89%
                                                          ---------  ---------               ---------  ---------

  Other non-interest bearing liabilities      5,961,501                          4,590,646
  Shareholders' equity                        7,915,334                          7,608,959
                                           -------------                        -----------

        Total liabilities and
            shareholders' equity           $ 74,539,221                         46,113,806
                                           =============                        ===========
Excess of interest-earning assets
  over interest-bearing liabilities        $  9,158,814                          7,391,796
                                           =============                        ===========
Ratio of interest-earning assets to
  interest-bearing liabilities                      115%                               122%
Net interest income                                       2,858,961                          1,705,535
                                                          =========                          =========

Net interest spread                                                      3.86%                              3.79%
                                                                     =========                          =========

Net interest margin                                                      4.09%                              4.13%
                                                                     =========                          =========
</TABLE>

Nonaccrual  loans  and  the interest income that was recorded on these loans, if
any,  are  included  in the yield calculation for loans in all periods reported.


                                        5
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

VOLUME/RATE  ANALYSIS

Net  interest  income  can  also  be analyzed in terms of the impact of changing
rates  and  changing  volume.  The following table describes the extent to which
changes  in  interest rates and changes in the volume of interest-earning assets
and  interest-bearing liabilities have affected our interest income and interest
expense  during  the  periods  indicated.

<TABLE>
<CAPTION>
                                                 2004 Compared to 2003
                                         Increase(decrease) due to changes in
                                      ---------------  ------------  ----------
                                          Volume           Rate      Net Change
                                      ---------------  ------------  ----------
Interest income on:
<S>                                   <C>              <C>           <C>
    Loans(including loan fees)        $     1,584,187      (50,537)   1,533,650
    Investment securities                      35,912       27,716       63,628
    Federal funds sold                         24,752        1,589       26,341
                                      ---------------  ------------  ----------

                                            1,644,851      (21,232)   1,623,619
                                      ---------------  ------------  ----------


Interest expense on:
    Interest-bearing demand                   119,817       27,082      146,889
    Savings                                     1,085         (679)         406
    Time                                      339,041      (36,246)     302,795
    Federal Home Loan Bank advances            18,790            -       18,790
    Other                                       1,734         (431)       1,303
                                      ---------------  ------------  ----------

                                              480,467      (10,274)     470,193
                                      ---------------  ------------  ----------

                                      $     1,164,384      (10,959)   1,153,426
                                      ===============  ============  ==========
</TABLE>

INTEREST RATE SENSITIVITY AND ASSET LIABILITY MANAGEMENT

Interest  rate sensitivity measures the timing and magnitude of the repricing of
assets  compared  with  the repricing of liabilities and is an important part of
asset/liability  management  of  a  financial  institution.  The  objective  of
interest  rate  sensitivity  management  is  to  generate  stable  growth in net
interest  income,  and  to  control  the  risks  associated  with  interest rate
movements.  Management  constantly  reviews  interest rate risk exposure and the
expected  interest  rate  environment  so  that  adjustments  in  interest  rate
sensitivity  can be timely made.  Since the assets and liabilities of a bank are
primarily  monetary  in  nature(payable  in  fixed,  determinable  amounts), the
performance  of  a  bank  is  affected more by changes in interest rates than by
inflation.  Interest  rates  generally  increase  as  the  rate  of  inflation
increases,  but  the  magnitude  of  the  change  in  rates may not be the same.

Net  interest  income  is  the  primary  component  of  net income for financial
institutions.  Net  interest  income  is affected by the timing and magnitude of
repricing  of as well as the mix of interest sensitive and noninterest sensitive
assets and liabilities.  "Gap" is a static measurement of the difference between
the  contractual  maturities or repricing dates of interest sensitive assets and
interest  sensitive  liabilities  within the following twelve months.  Gap is an
attempt  to  predict  the  behavior of the bank's net interest income in general
terms  during periods of movement in interest rates.  In general, if the bank is
asset  sensitive,  more of its interest sensitive assets are expected to reprice
within  twelve  months  than  its  interest  sensitive liabilities over the same
period.  In a rising interest rate environment, assets repricing more quickly is
expected  to  enhance  net  interest income.  Alternatively, decreasing interest
rates would be expected to have the opposite effect on net interest income since
assets  would  theoretically  be  repricing at lower interest rates more quickly
than  interest  sensitive  liabilities.  Although  it  can  be used as a general
predictor,  Gap  as  a  predictor  of  movements  in  net  interest  income  has
limitations  due  to the static nature of its definition and due to its inherent
assumption  that  all  assets  will  reprice  immediately  and  fully  at  the
contractually  designated  time.  At December 31, 2004, the bank, as measured by
Gap,  is  in  a  liability  sensitive  position.  Management  has  several tools
available  to  it  to  evaluate and affect interest rate risk, including deposit
pricing  policies  and  changes  in  the  mix  of  various  types  of assets and
liabilities.


                                        6
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

The  following  table  summarizes  the  amounts  of  interest-earning assets and
interest-bearing liabilities outstanding at December 31, 2004, that are expected
to  mature,  prepay, or reprice in each of the future time periods shown. Except
as  stated  below,  the  amount  of assets or liabilities that mature or reprice
during  a  particular  period  was determined in accordance with the contractual
terms  of  the  asset  or  liability.  Adjustable rate loans are included in the
period  in  which interest rates are next scheduled to adjust rather than in the
period  in  which  they  are  due,  and  fixed  rate  loans  and mortgage-backed
securities  are  included  in  the  periods  in which they are anticipated to be
repaid  based  on  scheduled  maturities.  The  bank's  savings  accounts  and
interest-bearing  demand  accounts(NOW and money market deposit accounts), which
are generally subject to immediate withdrawal, are included in the "Three Months
or  Less"  category, although historical experience has proven these deposits to
be  more  stable  over  the  course  of  a  year.

<TABLE>
<CAPTION>
                                                At December 31, 2004
                                              Maturing or Repricing in
                                             --------------------------
                                               (dollars in thousands)

                                             3 Months or    4 Months to   1 to 5   Over 5
                                                Less         12 Months     Years    Years   Total
                                            -------------  -------------  -------  -------  ------
<S>                                         <C>            <C>            <C>      <C>      <C>
Interest-earning assets:
    Federal funds sold                      $      7,086              -        -        -    7,086
    Investment securities                              -          1,391    4,883      999    7,273
    Loans                                         38,843         10,907   20,390    1,112   71,252
    Other investments                                  -              -        -      424      424
                                            -------------  -------------  -------  -------  ------

Total interest-bearing assets:                    45,929         12,298   25,273    2,535   86,035
                                            -------------  -------------  -------  -------  ------

Interest-bearing liabilities:
    Deposits:
      Savings and demand                          34,020              -        -        -   34,020
      Time deposits                               13,777         22,136    7,886        -   43,799
      Federal Home Loan Bank advance                   -              -    3,000        -    3,000
                                            -------------  -------------  -------  -------  ------

Total interest-bearing liabilities                47,797         22,136   10,886        -   80,819
                                            -------------  -------------  -------  -------  ------

Interest sensitive difference per period    $     (1,868)        (9,838)  14,387    2,535    5,216
                                            =============  =============  =======  =======  ======
Cumulative interest sensitivity difference  $     (1,868)       (11,706)   2,681    5,216
                                            =============  =============  =======  =======
Cumulative difference to total assets             (1.94%)       (12.18%)    2.79%    5.43%
</TABLE>

At  December  31, 2004, the difference between the bank's liabilities and assets
repricing  or  maturing  within  one  year  was  $11,706,000.

Certain  shortcomings  are  inherent  in the method of analysis presented in the
foregoing  table.  For example, although certain assets and liabilities may have
similar  maturities  or periods of repricing, they may reflect changes in market
interest  rates  differently.  Additionally,  certain  assets,  such  as
adjustable-rate  mortgages,  have  features  that  restrict  changes in interest
rates,  both on a short-term basis and over the life of the asset. Other factors
which  may  affect the assumptions made in the table include changes in interest
rates,  pre-payment rates, early withdrawal levels, and the ability of borrowers
to  service  their  debt.

PROVISION  AND  ALLOWANCE  FOR  LOAN  LOSSES

The  provision  for  loan  losses  is  the  charge  to  operating  earnings that
management believes is necessary to maintain the allowance for loan losses at an
adequate  level.  The  provision  charged  to  expense was $404,865 for the year
ended  December  31,  2004, compared to $324,390 for the year ended December 31,
2003.  The  loan  portfolio  increased  by  $25,702,197  during  the  year ended
December 31, 2004, compared to growth of $21,402,017 in 2003.  The provision has
been  a  result  of  management's efforts to increase the allowance to match the
growth  in the loan portfolio.  The allowance for loan losses was 1.40% of gross
loans  at  December  31, 2004 compared to 1.48% at December 31, 2003.  There are
risks  inherent  in making all loans, including risks with respect to the period
of time over which loans may be repaid, risks resulting from changes in economic
and  industry  conditions,  risks inherent in dealing with individual borrowers,
and,  in  the  case of a collateralized loan, risks resulting from uncertainties
about  the  future  value  of  the  collateral.  We  anticipate  maintaining  an
allowance  for  loan losses based on, among other things, historical experience,
an  evaluation  of economic conditions, and regular reviews of delinquencies and
loan  portfolio  quality.  Our  judgment  about the adequacy of the allowance is
based  upon  a number of assumptions about future events, which we believe to be


                                        7
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

reasonable,  but which may not prove to be accurate.  Thus, there is a risk that
charge-offs in future periods could exceed the allowance for loan losses or that
substantial  additional  increases  in  the  allowance  for loan losses could be
required.  Additions to the allowance for loan losses would result in a decrease
of  our  net  income  and,  possibly,  our  capital.  We  have  experienced  net
charge-offs  in  2004  of  $77,865.  Past  due  loans  greater  than 90 days and
nonaccrual  loans  were  $295,959  and $17,905, respectively, as of December 31,
2004.  We  had  $45,882 in other real estate or repossessions as of December 31,
2004.

The following table summarizes information concerning the allowance for loan
losses:

<TABLE>
<CAPTION>
                                                                December 31,
                                                                ------------
                                                     2004          2003         2002
                                                 -------------  -----------  -----------
<S>                                              <C>            <C>          <C>
Total loans outstanding, end of year              $71,251,586   45,549,389   24,147,372
                                                 =============  ===========  ===========
Average loans outstanding                         $60,357,925   34,843,677   10,625,401
                                                 =============  ===========  ===========
Balance at beginning of year                       $673,000       375,000         -
Charge-offs:
  Commercial                                                -            -            -
  Real estate - construction                                -            -            -
  Real estate - mortgage                               44,735            -            -
  Consumer                                             38,130       35,584
                                                 -------------  -----------

    Total charge-offs                                  82,865       35,584            -
                                                 -------------  -----------  -----------

Recoveries:
  Commercial                                                -            -            -
  Real estate - construction                                -            -            -
  Real estate - mortgage                                    -            -            -
  Consumer                                              5,000        9,194            -
                                                 -------------  -----------  -----------

    Total recoveries                                    5,000        9,194            -
                                                 -------------  -----------  -----------

Net charge-offs                                        77,865       26,390            -

Additions charged to operations                       404,865      324,390      375,000
                                                 -------------  -----------  -----------

Balance at end of year                           $  1,000,000      673,000      375,000
                                                 =============  ===========  ===========
Ratio of net charge-offs during the period to
  average loans outstanding during the period            0.13%        0.08%        0.00%
                                                 =============  ===========  ===========
Allowance for loan losses to loans, end of year          1.40%        1.48%        1.55%
                                                 =============  ===========  ===========
</TABLE>

The  Company  does  not  allocate  the allowance for loan losses to various loan
categories.  The entire allowance is available to absorb losses from any and all
loans.  Due  to  the short time that the bank has been open, management does not
estimate  the  amount  of  net  charge-offs  that  will  occur  in  2005.

Accrual  of  interest  is discontinued on a loan when management believes, after
considering  economic  and  business conditions and collection efforts, that the
borrower's  financial condition is such that collection of interest is doubtful.
The following table summarizes past due and non-accrual loans, other real estate
and repossessions, and income that would have been reported on non-accrual loans
as  of  December  31,  2004,  2003  and  2002:

<TABLE>
<CAPTION>
                                                December 31,
                                               --------------
                                           2004     2003    2002
                                         --------  -------  ----
<S>                                      <C>       <C>      <C>
Accruing loans 90 days or more past due  $295,959   37,000     -
Non-accrual loans                          17,905   47,000     -
Interest on non-accrual loans which
  would have been reported                    832    1,000     -
Other real estate and repossessions        45,882        -     -
</TABLE>


                                        8
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

NONINTEREST  INCOME  AND  EXPENSE

Noninterest  income  for  the  year  ended December 31, 2004 totaled $606,769 as
compared  to  $467,128  for  the  year  ended  December  31,  2003.  The largest
component  of other income is service charges on deposit accounts, which totaled
$363,191 during 2004 compared to $193,662 in 2003.  An increase in the number of
customers  during  2004  facilitated  the increase in service charges.  Mortgage
origination fee income totaled $221,475 during the year ended December 31, 2004.
The decrease in mortgage origination fee income of $39,851 from the December 31,
2003  balance  of  $261,326  was  due  to  rising  interest rates, which reduced
refinancing  volume  in  the  residential  real  estate  market.

Total noninterest expense for the year ended December 31, 2004 was $2,567,230 as
compared  to $2,153,070 for the same period in 2003.  Salaries and benefits, the
largest  component of noninterest expense, totaled $1,182,704 for the year ended
December  31,  2004, compared to $1,000,005 for the same period a year ago.  Net
occupancy  and  equipment  expense  was $331,622 during 2004 and other operating
expenses  totaled  $1,052,904,  compared to $280,344 and $872,721, respectively,
during  2003.  The  increase in occupancy expense and other operating expense is
directly  related  to  the  overall  growth  of  the  bank.

INCOME  TAXES

In  2004,  we  recognized  a previously unrecognized net deferred tax benefit of
$449,818 as it became more likely than not that we would be able to realize this
benefit.  In  2003,  we  recognized  no  income tax benefit due to the fact that
realization of such a benefit was dependent upon future earnings of our company.

                               FINANCIAL CONDITION

Total  assets  were $96,069,398 as of December 31, 2004, compared to $63,290,834
as  of  December 31, 2003. The primary source of growth in assets was net loans,
which  totaled  $70,251,586,  or  73%  of total assets, as of December 31, 2004.
Investment  securities  available-for-sale  totaled  $7,272,616  at December 31,
2004,  compared  to  $5,570,678  at  December  31,  2003.  Total  deposits  were
$84,274,191,  or  88%  of  total  assets,  at  December  31,  2004,  compared to
$55,674,566, or 88% of total assets, as of December 31, 2003.  Federal Home Loan
Bank  borrowings were $3,000,000 as of December 31, 2004.  The Bank did not have
any  Federal  Home  Loan  Bank  borrowings  as  of  December  31,  2003.

INTEREST-EARNING  ASSETS

LOANS

Gross loans totaled $71,251,586 at December 31, 2004, an increase of $25,702,197
or  56%,  since  December  31, 2003.  The largest classification of loans was in
real  estate  mortgage  loans,  which totaled $45,417,234 or 64% at December 31,
2004.  Balances  within the major loans receivable categories as of December 31,
2004  and  December  31,  2003  are  as  follows:

<TABLE>
<CAPTION>
                                                2004                  2003
                                         -------------------  --------------------
<S>                                      <C>          <C>     <C>          <C>
Commercial, financial and agricultural   $11,396,239  15.99%  $ 7,843,325   17.22%
Real estate - mortgage                    45,417,234  63.74%   28,290,032   62.11%
Real estate - construction                 8,049,926  11.30%    5,164,115   11.34%
Consumer and other                         6,388,187   8.97%    4,251,917    9.33%
                                         -----------  ------  -----------  -------

                                         $71,251,586  100.0%  $45,549,389  100.00%
                                         ===========  ======  ===========  =======
</TABLE>

As  of  December  31, 2004, maturities of loans in the indicated classifications
were  as  follows:

<TABLE>
<CAPTION>
                            Real Estate
               Commercial   Construction    Total
               -----------  ------------  ----------

Maturity
<S>            <C>          <C>           <C>
Within 1 year  $ 8,816,138     7,932,846  16,748,984
1 to 5 years     2,270,161       117,080   2,387,241
Over 5 years       309,940             -     309,940
               -----------  ------------  ----------

    Totals     $11,396,239     8,049,926  19,446,165
               ===========  ============  ==========
</TABLE>


                                        9
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

As  of  December  31,  2004,  the  interest  terms  of  loans  in  the indicated
classification  for  the  indicated  maturity  ranges  are  as  follows:

<TABLE>
<CAPTION>
                              Fixed     Variable
                             Interest   Interest
                              Rates      Rates      Total
                            ----------  --------  ---------
<S>                         <C>         <C>       <C>
Commercial
    1 to 5 years            $2,270,161         -  2,270,161
    Over 5 years               309,940         -    309,940

Real estate - construction
    1 to 5 years               117,080         -    117,080
                            ----------  --------  ---------

                            $2,697,181         -  2,697,181
                            ==========  ========  =========
</TABLE>

INVESTMENT SECURITIES

Investment  securities  available-for-sale  totaled  $7,272,616  at December 31,
2004, compared to $5,570,678 at December 31, 2003.  All of the bank's marketable
investment securities were designated as available-for-sale at December 31, 2004
and  2003 and consisted of United States Government agencies and mortgage backed
securities.  The amortized cost of these investment securities was $7,314,413 at
December  31,  2004.

The  following  table  presents the investments by category at December 31, 2004
and  2003:

<TABLE>
<CAPTION>
                                              2004                          2003
                                  -----------------------------  ---------------------------
                                               (Amounts are presented in thousands)


                                                     Estimated                    Estimated
                                                    -----------                  -----------
                                   Amortized Cost   Fair Value   Amortized Cost  Fair Value
                                   ---------------  -----------  --------------  -----------
<S>                                <C>              <C>          <C>             <C>
United States government agencies  $         5,491        5,463           1,998        1,993
Mortgage-backed                              1,823        1,810           3,596        3,578
                                   ---------------  -----------  --------------  -----------

                                   $         7,314        7,273           5,594        5,571
                                   ===============  ===========  ==============  ===========
</TABLE>

The  following  table  presents  the  maturities  of  investment  securities  at
amortized  cost  and  the  weighted  average yields for each range of maturities
presented.  Yields are based on amortized cost of securities. (Amounts presented
in  thousands).

<TABLE>
<CAPTION>
                                                  Weighted                     Weighted
                                 U.S. Government  Average   Mortgage-backed    Average
                                    Agencies       Yields       Securities      Yields
                                 ---------------  ---------  ----------------  ---------
<S>                              <C>              <C>        <C>               <C>

Maturities at December 31, 2004
-------------------------------

Within 1 year                    $             -         -%  $          1,400      2.27%
After 1 through 5 years                    4,496      3.10%               423      3.19%
After 5 through 10 years                     995      5.30%                 -         -
                                 ---------------             ----------------
After 10 years

Totals                           $         5,491      3.50%  $          1,823      2.48%
                                 ===============  =========  ================  =========
</TABLE>


                                       10
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

DEPOSITS

At  December  31, 2004, deposits totaled $84,274,191 compared to $55,674,566 for
the  previous  year.  Noninterest-bearing  demand  deposits  were  $6,455,161 or
7.66%,  of  total  deposits  and  interest-bearing  deposits were $77,819,030 or
92.34%  of  total  deposits,  at  December  31,  2004.

Balances  within  the  major deposit categories as of December 31, 2004 and 2003
are  as  follows:

<TABLE>
<CAPTION>
                                                   2004                  2003
                                           --------------------  --------------------
<S>                                        <C>          <C>      <C>          <C>
Noninterest-bearing demand deposits        $ 6,455,161    7.66%  $ 5,476,791    9.85%
Interest-bearing demand deposits            32,006,220   37.98%   26,469,185   47.54%
Savings deposits                             2,013,546    2.39%    1,471,359    2.64%
Certificates of deposit $100,000 and over   23,883,950   28.34%    8,219,513   14.76%
Other time deposits                         19,915,314   23.63%   14,037,718   25.21%
                                           -----------  -------  -----------  -------

                                           $84,274,191  100.00%  $55,674,566  100.00%
                                           ===========  =======  ===========  =======
</TABLE>

The average balance of deposits and the average rates paid on such deposits are
summarized for 2004 and 2003 in the following table.

<TABLE>
<CAPTION>
                                             December 31,
                            -----------------------------------------
                                     2004                  2003
                            ---------------------  ------------------

                              Amount       Rate      Amount     Rate
                            -----------  --------  -----------  -----
<S>                         <C>          <C>       <C>          <C>
Noninterest-bearing demand  $ 5,726,023        -   $ 4,455,590     -
Interest-bearing demand      22,652,229     1.31%   13,270,875  1.13%
Savings                       1,802,578     0.49%    1,275,546  0.67%
Time deposits                34,223,293     2.29%   19,249,441  2.50%
                            -----------            -----------

    Totals                  $64,404,123            $38,251,452
                            ===========            ===========
</TABLE>

Maturities of time certificates of deposit of $100,000 or more outstanding at
December 31, 2004, are summarized as follows:

<TABLE>
<CAPTION>
<S>                        <C>
Within 3 months            $ 5,005,367
After 3 through 6 months     2,027,024
After 6 through 12 months   10,732,443
After 12 months              6,119,116
                           -----------

Total                      $23,883,950
                           ===========
</TABLE>

BORROWED  FUNDS

At  December 31, 2004, the bank has an advance outstanding with the Federal Home
Loan  Bank  in  the  amount  of  $3,000,000.  We  did  not  have  any borrowings
outstanding as of December 31, 2003.  The average rate we paid on borrowings for
the  year ended December 31, 2004 was 1.17%.  The bank has pledged approximately
$12,389,000  in  qualifying  mortgage  loans  as  security  for this advance and
possible future advances.  This advance bears interest at a fixed rate of 2.01%,
requires  quarterly  interest payments, is callable on June 20, 2005 and matures
on  June  18,  2007.   At  maturity, the bank will determine whether to repay or
renew  these  loans  based  on  the  existing rate environment and interest rate
considerations.  As  of December 31, 2004, the bank had $6,911,000 in additional
borrowing capacity under the borrowing arrangement with the FHLB.  Additionally,
the  bank  has  a  $2,000,000  overnight  federal  funds line of credit with its
correspondent  bank to cover short-term liquidity needs.  The credit line had no
outstanding  balance  as  of  December  31,  2004.

CAPITAL  RESOURCES

Shareholders'  equity  totaled  $8,381,121  at  December  31,  2004  compared to
$7,449,548 at December 31, 2003.  Our net income for the year ended December 31,
2004  was  $943,453,  and  accumulated  other  comprehensive income, net of tax,
decreased  $11,880.


                                       11
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

Bank  holding companies, such as us, and their banking subsidiaries are required
by  banking regulators to meet certain minimum levels of capital adequacy, which
are  expressed  in  the  form  of  certain  ratios.  These  capital requirements
currently  apply  to  us  only  at  the  bank level.  Once we have at least $150
million  in  total  assets,  these  requirements  will also apply at the holding
company  level.  Capital  is  separated  into  Tier 1 capital(essentially common
shareholders'  equity less intangible assets) and Tier 2 capital(essentially the
allowance  for  loan  losses  limited to 1.25% of risk-weighted assets).  In the
table  below, the first two ratios, which are based on the degree of credit risk
in  our  assets,  provide the weighting of assets based on assigned risk factors
and  include  off-balance  sheet  items  such  as  loan commitments and stand-by
letters  of credit.  The ratio of Tier 1 capital to risk-weighted assets must be
at least 4.0% and the ratio of total capital(Tier 1 capital plus Tier 2 capital)
to  risk-weighted  assets  must  be  at  least 8.0%.  The capital leverage ratio
supplements  the  risk-based  capital  guidelines.

Banks  and  bank  holding  companies are required to maintain a minimum ratio of
Tier  1  capital  to  adjusted  quarterly  average  total  assets  of  3.0%.

The  following table summarizes the bank's risk-based capital ratios at December
31,  2004:

<TABLE>
<CAPTION>
<S>                                         <C>
   Tier 1 capital(to risk-weighted assets)   9.43%
   Total capital(to risk-weighted assets)   10.68%
   Tier 1 capital(to total average assets)   8.43%
</TABLE>

LIQUIDITY

The  bank  must  maintain,  on  a  daily  basis,  sufficient  funds to cover the
withdrawals from depositors' accounts and to supply new borrowers with funds. To
meet  these obligations, the bank keeps cash on hand, maintains account balances
with  its  correspondent  banks, and purchases and sells federal funds and other
short-term  investments.  Asset  and  liability  maturities  are monitored in an
attempt to match the maturities to meet liquidity needs. It is the policy of the
bank  to  monitor  its liquidity to meet regulatory requirements and their local
funding  requirements.

The bank maintains relationships with correspondent banks that can provide funds
to  it  on  short  notice,  if needed. Presently, the bank has arrangements with
commercial  banks  for  short  term  unsecured  advances  up  to  $2,000,000.

Cash  and  cash  equivalents  as  of December 31, 2004 increased $4,591,605 from
December  31,  2003.  Cash  provided by operating activities totaled $967,551 in
2004,  while  inflows  from financing activities totaled $31,599,625, which were
attributable  to  net deposit increases and proceeds from Federal Home Loan Bank
borrowings.

During  2004,  investing  activities  used  $27,975,571.  Investing  activities
included  net  loans  made  to customers of $25,860,944, purchases of investment
securities  available-for-sale  of  $4,000,000  and  purchases  of  premises and
equipment of $189,390, partially offset by maturities and paydowns of investment
securities  available-for-sale  of  $2,222,063.

OFF-BALANCE SHEET ARRANGEMENTS

We  are  a  party  to  financial  instruments with off-balance-sheet risk in the
normal  course  of business to meet the financing needs of our customers.  These
financial  instruments  consist  of  commitments  to  extend  credit and standby
letters  of  credit.  Commitments  to  extend credit are agreements to lend to a
customer  as  long  as there is no violation of any condition established in the
contract.  Standby  letters of credit are written conditional commitments issued
by  the  bank to guarantee the performance of a customer to a third party. Those
guarantees  are  primarily  issued  to  support  public  and  private  borrowing
arrangements.  Most  letters of credit extend for less than one year. The credit
risk  involved  in  issuing  letters  of  credit is essentially the same as that
involved  in extending loan facilities to customers.  Commitments generally have
fixed expiration dates or other termination clauses and may require payment of a
fee.  A commitment involves, to varying degrees, elements of credit and interest
rate  risk  in  excess  of  the  amount  recognized  in the balance sheets.  Our
exposure  to  credit  loss in the event of non-performance by the other party to
the  instrument  is  represented  by  the  contractual  notional  amount  of the
instrument.


                                       12
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS, CONTINUED

Since  certain  commitments are expected to expire without being drawn upon, the
total  commitment amounts do not necessarily represent future cash requirements.
We  use the same credit policies in making commitments to extend credit as we do
for  on-balance-sheet  instruments.  Collateral  held  for commitments to extend
credit  varies  but may include accounts receivable, inventory, property, plant,
equipment,  and  income-producing  commercial  properties.

The following table summarizes our off-balance-sheet financial instruments whose
contract  amounts  represent  credit  risk  as  of  December  31,  2004:

<TABLE>
<CAPTION>
<S>                           <C>
Commitments to extend credit  $11,911,495
Standby letters of credit     $         -
</TABLE>

Management is not aware of any significant concentrations of loans to classes of
borrowers or industries that would be affected similarly by economic conditions.
Although  the bank's loan portfolio is diversified, a substantial portion of its
borrowers'  ability  to  honor  the  terms  of  their  loans is dependent on the
economic  conditions  in  Bulloch  County  and  surrounding  areas.

INFLATION

Inflation  impacts the growth in total assets in the banking industry and causes
a  need  to  increase equity capital at higher than normal rates to meet capital
adequacy  requirements.  We  cope  with  the  effects  of  inflation through the
management  of  our  interest  rate  sensitivity  gap  position, by periodically
reviewing  and  adjusting  our pricing of services to consider current costs and
through managing our level of net income relative to our dividend payout policy.

SELECTED RATIOS

The following table sets out certain ratios of the Company for the years ended
December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>
                                     2004    2003      2002
                                    ------  -------  --------
<S>                                 <C>     <C>      <C>
Net earnings(loss) to:
    Average shareholders' equity    11.92%  (4.01)%  (13.26)%
    Average assets                   1.27%   (.66)%   (5.93)%
Average equity to average assets    10.62%   16.50%    44.71%
Dividends to net earnings               -        -         -
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

In  December  2004,  the  Financial  Accounting  Standards Board("FASB") adopted
Statement  of  Financial  Accounting  Standards  No.  123(R),  Share-Based
Payment("SFAS  No.  123(R)"),  which  revises and amends SFAS No. 123.  SFAS No.
123(R)  requires all share-based payments to employees, including stock options,
to  be  recognized  in the financial statements based on their fair values. Upon
adoption,  pro  forma  disclosure  is  no  longer  an  alternative  to financial
statement  recognition.  SFAS  No.  123(R) will be effective for our company for
financial statements beginning after December 15, 2005.  We are still evaluating
the  transition  provisions  allowed  by SFAS No. 123(R) and expect to adopt its
provisions  in  the  first  quarter  of  2006.  We  have  not yet determined the
financial  statement  impact  of  the  pronouncement.

In  March  2004,  The  Emerging  Issues Task Force("EITF") issued EITF 03-1, The
Meaning  of  Other-Than-Temporary  Impairment  and  its  Application  to Certain
Investments("EITF 03-1").  EITF 03-1 provides guidance for evaluating whether an
investment  is  other-than-temporarily  impaired.  The  disclosure  guidance was
effective  for  other-than-temporary  impairment  evaluations  made in reporting
periods  beginning  after June 15, 2004, whereas the recognition and measurement
guidance  has been deferred.  The disclosures required by EITF 03-1 are included
in  Note  2  to  the consolidated financial statements.  We did not recognize an
impairment  loss  on  any  investment  in  2004  or  2003.

Other  accounting  standards  that  have been issued or proposed by the FASB and
other standard setting entities that do not require adoption until a future date
are  not  expected  to  have  a  material  impact  on our consolidated financial
statements  upon  adoption.


                                       13
<PAGE>
                               [GRAPHIC OMITTED]

                            Porter Keadle Moore, LLP
                            ------------------------

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors
First Southern Bancorp
Statesboro, Georgia

We  have  audited the accompanying consolidated balance sheets of First Southern
Bancorp  and  subsidiary  as  of  December  31,  2004  and 2003, and the related
statements  of operations, changes in shareholders' equity, comprehensive income
and  cash  flows  for  the  years then ended. These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  Those standards require that we
plan  and  perform  the  audit  to obtain reasonable assurance about whether the
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial statement presentation.  We believe that our
audits  provide  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial position of First Southern
Bancorp and subsidiary as of December 31, 2004 and 2003 and the results of their
operations  and  their  cash  flows  for the years then ended in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.


                                            /s/ Porter Keadle Moore, LLP
                                                   [GRAPHIC OMITTED]


Atlanta, Georgia
February 11, 2005




                          Certified Public Accountants
--------------------------------------------------------------------------------
      Suite 1800 - 235 Peachtree Street NE - Atlanta, Georgia 30303 - Phone
                  404-588-4200 - Fax 404-588-4222 - www.pkm.com


                                       14
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                       2004         2003
                                                                   ------------  -----------
<S>                                                                <C>           <C>
                                     Assets
                                     ------
Cash and due from banks                                            $ 6,710,767    2,988,162
Federal funds sold                                                   7,086,000    6,217,000
                                                                   ------------  -----------

    Cash and cash equivalents                                       13,796,767    9,205,162

Investment securities available-for-sale                             7,272,616    5,570,678
Other investments                                                      424,350      277,050
Loans, net                                                          70,251,586   44,876,389
Premises and equipment, net                                          3,016,786    2,960,532
Accrued interest receivable and other assets                         1,307,293      401,023
                                                                   ------------  -----------

                                                                   $96,069,398   63,290,834
                                                                   ============  ===========

                      Liabilities and Shareholders' Equity
                      ------------------------------------

Liabilities:
  Deposits:
    Noninterest-bearing demand                                     $ 6,455,161    5,476,791
    Interest-bearing demand and money market                        32,006,220   26,469,185
    Savings                                                          2,013,546    1,471,359
    Time                                                            43,799,264   22,257,231
                                                                   ------------  -----------

    Total deposits                                                  84,274,191   55,674,566

  Federal Home Loan Bank advances                                    3,000,000            -
  Accrued interest payable and other liabilities                       414,086      166,720
                                                                   ------------  -----------

    Total liabilities                                               87,688,277   55,841,286
                                                                   ------------  -----------

Commitments

Shareholders' equity:
  Preferred stock, $.01 par value; 10,000,000 shares authorized;
    no shares issued and outstanding                                         -            -
  Common stock, $.01 par value; 10,000,000 shares authorized;
    920,547 shares issued and outstanding in 2004 and 2003               9,205        9,205
  Additional paid-in capital                                         9,125,765    9,125,765
  Accumulated deficit                                                 (727,099)  (1,670,552)
  Accumulated other comprehensive income(loss)                         (26,750)     (14,870)
                                                                   ------------  -----------

    Total shareholders' equity                                       8,381,121    7,449,548
                                                                   ------------  -----------

                                                                   $96,069,398   63,290,834
                                                                   ============  ===========
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


                                       15
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                               2004          2003
                                                          --------------  ----------
<S>                                                       <C>             <C>
Interest income:
    Interest and fees on loans                            $    3,750,598  2,216,948
    Interest and dividends on investment securities              169,400    105,772
    Interest on federal funds sold                                51,044     24,703
                                                          --------------  ----------

    Total interest income                                      3,971,042  2,347,423
                                                          --------------  ----------

Interest expense:
    Interest expense on deposits                               1,089,146    639,046
    Interest expense on Federal Home Loan Bank advances           18,790          -
    Other interest expense                                         4,145      2,842
                                                          --------------  ----------

    Total interest expense                                     1,112,081    641,888
                                                          --------------  ----------

    Net interest income                                        2,858,961  1,705,535

Provision for loan losses                                        404,865    324,390
                                                          --------------  ----------

    Net interest income after provision for loan losses        2,454,096  1,381,145
                                                          --------------  ----------

Other income:
    Service charges on deposit accounts                          363,191    193,662
    Residential mortgage origination fees                        221,475    261,326
    Miscellaneous                                                 22,103     12,140
                                                          --------------  ----------

        Total other income                                       606,769    467,128
                                                          --------------  ----------

Other expense:
    Salaries and benefits                                      1,182,704  1,000,005
    Net occupancy and equipment                                  331,622    280,344
    Other operating                                            1,052,904    872,721
                                                          --------------  ----------

        Total other expense                                    2,567,230  2,153,070
                                                          --------------  ----------

        Earnings(loss) before income tax benefit                 493,635   (304,797)

Income tax benefit                                               449,818          -
                                                          --------------  ----------

        Net earnings(loss)                                $      943,453   (304,797)
                                                          ==============  ==========

        Basic and diluted earnings(loss) per share        $         1.02      (0.33)
                                                          ==============  ==========
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


                                       16
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                        Accumulated
                                              Additional                   Other
                                     Common    paid-in    Accumulated   Comprehensive
                                      Stock    Capital      Deficit     Income(Loss)      Total
                                     -------  ----------  ------------  --------------  ------------
<S>                                  <C>      <C>         <C>           <C>             <C>
Balance, December 31, 2002           $ 9,195   9,115,775   (1,365,755)          9,154     7,768,369

Exercise of stock options                 10       9,990            -               -        10,000
Net loss                                   -           -     (304,797)              -      (304,797)
Change in unrealized gain/loss
  on securities available-for-sale,
  net of tax                               -           -            -         (24,024)      (24,024)
                                     -------  ----------  ------------  --------------  ------------

Balance, December 31, 2003             9,205   9,125,765   (1,670,552)        (14,870)    7,449,548

Net earnings                               -           -      943,453               -       943,453
Change in unrealized gain/loss
  on securities available-for-sale,
  net of tax                               -           -            -         (11,880)      (11,880)
                                     -------  ----------  ------------  --------------  ------------

Balance, December 31, 2004           $ 9,205   9,125,765     (727,099)        (26,750)    8,381,121
                                     =======  ==========  ============  ==============  ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       17
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                     2004       2003
                                                                   ---------  ---------
<S>                                                                <C>        <C>

Net earnings(loss)                                                 $943,453   (304,797)
                                                                   ---------  ---------
Other comprehensive loss, net of tax:
  Unrealized losses on investment securities available-for-sale:
    Unrealized losses arising during the period                     (18,563)   (37,537)
    Income tax benefit related to unrealized losses                   6,683     13,513
                                                                   ---------  ---------

Other comprehensive loss                                            (11,880)   (24,024)
                                                                   ---------  ---------

Comprehensive income(loss)                                         $931,573   (328,821)
                                                                   =========  =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       18
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                  2004           2003
                                                              -------------  ------------
<S>                                                           <C>            <C>
Cash flows from operating activities:
    Net earnings(loss)                                        $    943,453      (304,797)
      Adjustments to reconcile net earnings(loss) to
        net cash provided by operating activities:
          Provision for loan losses                                404,865       324,390
          Deferred tax benefit                                    (449,818)            -
          Depreciation, amortization and accretion                 190,572       195,132
          Change in:
            Other assets                                          (368,887)     (121,575)
            Other liabilities                                      247,366        84,353
                                                              -------------  ------------

                  Net cash provided by operating activities        967,551       177,503
                                                              -------------  ------------

Cash flows from investing activities:
    Proceeds from maturities and paydowns
      of investment securities available-for-sale                2,222,063     2,123,864
    Purchases of investment securities available-for-sale       (4,000,000)   (4,766,211)
    Proceeds from sale of other investments                              -        33,250
    Purchases of other investments                                (147,300)     (113,800)
    Net change in loans                                        (25,860,944)  (21,428,407)
    Purchases of premises and equipment                           (189,390)     (942,663)
                                                              -------------  ------------

                  Net cash used by investing activities        (27,975,571)  (25,093,967)
                                                              -------------  ------------

Cash flows from financing activities:
    Net change in deposits                                      28,599,625    31,611,537
    Proceeds from Federal Home Loan Bank advances                3,000,000             -
    Proceeds from exercise of stock options                              -        10,000
                                                              -------------  ------------

                  Net cash provided by financing activities     31,599,625    31,621,537
                                                              -------------  ------------

Net change in cash and cash equivalents                          4,591,605     6,705,073

Cash and cash equivalents at beginning of the year               9,205,162     2,500,089
                                                              -------------  ------------

Cash and cash equivalents at end of the year                  $ 13,796,767     9,205,162
                                                              =============  ============

Noncash investing and financing activities:
    Change in unrealized gain/loss on securities
      available-for-sale, net of tax                          $    (11,880)      (24,024)
    Transfer of loans to other real estate                    $     80,882             -

Supplemental information of amounts paid for interest, net
of amounts capitalized                                        $  1,039,749       603,871
</TABLE>

See accompanying notes to consolidated financial statements.


                                       19
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
     Basis of Presentation
     ---------------------
     The  consolidated  financial  statements  include  the  accounts  of  First
     Southern  Bancorp(the  "Company")  and  its  wholly owned subsidiary, First
     Southern  National  Bank(the "Bank"). All significant intercompany accounts
     and transactions have been eliminated in consolidation.

     The  Company  raised  $9,124,970,  net  of  offering  expenses  of $70,500,
     through  the  sale  of 919,547 shares of its $.01 par value common stock at
     $10.00  per  share  and was incorporated for the purpose of becoming a bank
     holding  company.  The  Bank  commenced  business  on February 5, 2002 upon
     receipt  of  its  banking  charter  from  the  Office of the Comptroller of
     Currency("OCC").  The  Bank is primarily regulated by the OCC and undergoes
     periodic  examinations  by this regulatory agency. The Company is regulated
     by  the  Federal Reserve Bank and also is subject to periodic examinations.
     The  Bank provides a full range of commercial and consumer banking services
     throughout Bulloch County in Georgia.

     The  accounting  principles  followed  by  the  Company  and  the Bank, and
     the  methods  of  applying  these  principles,  conform  with  accounting
     principles  generally  accepted  in  the United States of America(GAAP) and
     with  general practices in the banking industry. In preparing the financial
     statements  in  conformity  with  GAAP,  management  is  required  to  make
     estimates and assumptions that affect the reported amounts in the financial
     statements. Actual results could differ significantly from these estimates.
     Material  estimates  common  to  the banking industry that are particularly
     susceptible  to  significant  change  in the near term include, but are not
     limited  to,  the  determination  of  the  allowance  for  loan losses, the
     valuation  of  real  estate  acquired  in  connection  with  or  in lieu of
     foreclosure  on  loans,  and  valuation  allowances  associated  with  the
     realization  of  deferred  tax  assets,  which  are based on future taxable
     income.

     Cash and Cash Equivalents
     -------------------------
     Cash  equivalents  include  amounts  due  from  banks  and  federal  funds
     sold.  Generally,  federal  funds  are  sold  for  one-day periods. Reserve
     requirements  maintained  with the Federal Reserve Bank totaled $238,000 as
     of  December  31,  2004.  The  Bank had no such requirement at December 31,
     2003.

     Investment Securities
     ---------------------
     The  Company  classifies  its  securities  in  one  of  three  categories:
     trading,  available-for-sale,  or  held-to-maturity. Trading securities are
     bought  and  held  principally  for the purpose of selling them in the near
     term.  Held-to-maturity  securities  are  those  securities  for  which the
     Company  has  the ability and intent to hold until maturity. All securities
     not  included  in  trading  or  held-to-maturity  are  classified  as
     available-for-sale.  At  December  31,  2004  and  2003, all securities are
     classified as available-for-sale.

     Available-for-sale  securities  are  recorded  at  fair  value.
     Held-to-maturity  securities  are  recorded  at  cost,  adjusted  for  the
     amortization  or  accretion  of  premiums  or discounts. Unrealized holding
     gains  and  losses,  net  of  the  related  tax  effect,  on  securities
     available-for-sale  are  excluded  from  earnings  and  are  reported  as a
     separate  component  of  shareholders'  equity until realized. Transfers of
     securities  between  categories  are  recorded at fair value at the date of
     transfer.

     A  decline  in  the  market  value  of  any  available-for-sale  or
     held-to-maturity security below cost that is deemed other than temporary is
     charged to earnings and establishes a new cost basis for the security.

     Premiums  and  discounts  are  amortized  or  accreted over the life of the
     related  securities  as adjustments to the yield. Realized gains and losses
     for  securities  classified  as available-for-sale and held-to-maturity are
     included  in  earnings  and  are  derived using the specific identification
     method for determining the cost  of  securities  sold.


                                       20
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED
     Other Investments
     -----------------
     Other  investments  include  equity  securities  with  no  readily
     determinable fair value. These investments are carried at cost.

     Loans and Allowance for Loan Losses
     -----------------------------------
     Interest  on  loans  is  calculated  by using the simple interest method on
     daily balances of the principal amount outstanding.

     A  loan  is  considered  impaired  when,  based  on current information and
     events,  it  is  probable that all amounts due according to the contractual
     terms  of  the  loan  agreement  will  not be collected. Impaired loans are
     measured  based  on  the  present  value  of  expected  future  cash  flows
     discounted  at  the  loan's  effective  interest  rate,  or  at  the loan's
     observable market price, or at the fair value of the collateral of the loan
     if the loan is collateral dependent. Accrual of interest is discontinued on
     a  loan  when  management believes, after considering economic and business
     conditions  and collection efforts, that the borrower's financial condition
     is such that collection of interest is doubtful.

     The  allowance  for  loan  losses  is  established  through a provision for
     loan losses charged to expense. Loans are charged against the allowance for
     loan  losses  when  management  believes  that  the  collectibility  of the
     principal  is  unlikely.  The  allowance  represents  an  amount  which, in
     management's  judgment,  will  be  adequate  to  absorb  probable losses on
     existing loans that may become uncollectible.

     Management's  judgment  in  determining  the  adequacy  of the allowance is
     based on evaluations of the collectibility of loans. These evaluations take
     into  consideration such factors as changes in the nature and volume of the
     loan  portfolio, current economic conditions that may affect the borrower's
     ability  to  pay,  overall portfolio quality and review of specific problem
     loans.

     Management's  judgment  in  determining  the  adequacy  of the allowance is
     based on evaluations of the collectibility of loans. These evaluations take
     into  consideration such factors as changes in the nature and volume of the
     loan  portfolio, current economic conditions that may affect the borrower's
     ability  to  pay, overall portfolio quality, and review of specific problem
     loans.  In  determining  the  adequacy  of  the  allowance for loan losses,
     management  uses  a loan grading system that rates loans in eight different
     categories.  Grades  are  assigned  allocations of loss based on peer group
     loss experience and regulatory guidelines. The combination of these results
     are compared monthly to the recorded allowance for loan losses and material
     differences are adjusted by increasing or decreasing the provision for loan
     losses.

     Management  believes  that  the  allowance  for  loan  losses  is adequate.
     While  management  uses available information to recognize losses on loans,
     future  additions  to  the  allowance  may be necessary based on changes in
     economic  conditions.  In  addition,  various  regulatory  agencies,  as an
     integral  part of their examination process, periodically review the Bank's
     allowance  for loan losses. Such agencies may require the Bank to recognize
     additions  to  the  allowance  based  on  judgments different than those of
     management.

     Premises and Equipment
     ----------------------
     Premises  and  equipment  are  stated  at  cost  less  accumulated
     depreciation.  Depreciation is provided using the straight-line method over
     the  estimated  useful  lives of the assets. Costs incurred for maintenance
     and repairs are expensed currently.

     Depreciation  expense  is  computed  over  the  following  estimated useful
     lives:

<TABLE>
<CAPTION>
<S>                              <C>
Building and improvements        10 - 39.5 years
Furniture and equipment          5 - 10 years
Computer Equipment / Software    3 years
</TABLE>


                                       21
<PAGE>
                                     ------
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED
     Income Taxes
     ------------
     Deferred  tax  assets  and  liabilities  are  recognized for the future tax
     consequences  attributable  to  differences between the financial statement
     carrying  amounts  of  existing assets and liabilities and their respective
     tax  bases  and  operating  loss and tax credit carryforwards. Deferred tax
     assets  and  liabilities  are  measured using enacted tax rates expected to
     apply  to  taxable income in the years in which those temporary differences
     are  expected to be recovered or settled. The effect on deferred tax assets
     and  liabilities  of  a  change in tax rates is recognized in income in the
     period that includes the enactment date.

     In  the  event  the  future  tax  consequences  of  differences between the
     financial  reporting  bases and the tax bases of the assets and liabilities
     results  in  deferred tax assets, an evaluation of the probability of being
     able  to realize the future benefits indicated by such asset is required. A
     valuation  allowance  is provided for the portion of the deferred tax asset
     when  it  is  more likely than not that some portion or all of the deferred
     tax  asset  will  not  be  realized.  In assessing the realizability of the
     deferred  tax  assets,  management  considers  the  scheduled  reversals of
     deferred tax liabilities, projected future taxable income, and tax planning
     strategies.

     Net Earnings(Loss) Per Share
     ----------------------------
     Earnings(loss)  per  share  are  based  on  the  weighted average number of
     common  shares outstanding during the period while the effects of potential
     common  shares  outstanding  during  the  period  are  included  in diluted
     earnings  per  share. The presentation of earnings per share is required on
     the  face  of  the  statement  of  operations with and without the dilutive
     effects  of  potential  common  stock  issuances  from  instruments such as
     options,  convertible  securities  and  warrants.  Additionally,  the
     reconciliation of the amounts used in the computation of both "earnings per
     share" and "diluted earnings per share" is required.

     For  2004,  the  outstanding  potential  common  shares(warrants  and
     options) would not change basic earnings per share. For 2003, the potential
     effect  of  outstanding  options  and  warrants would be anti-dilutive, and
     therefore is not presented. Anti-dilutive potential stock issuances totaled
     282,162 at December 31, 2003.

     For  2004  and  2003,  net  earnings(loss)  per  share is based on weighted
     average shares outstanding of 920,547 and 919,847, respectively.

     Stock-Based Compensation
     ------------------------
     At  December  31,  2004,  the  Company  sponsors  stock-based  compensation
     plans,  which  are described more fully in Note 9. The Company accounts for
     these plans under the recognition and measurement principles of APB Opinion
     No.  25,  "Accounting  for  Stock  Issued  to  Employees",  and  related
     Interpretations.  No stock-based employee compensation cost is reflected in
     net  earnings,  as  all  options  granted under those plans had an exercise
     price  equal to the market value of the underlying common stock on the date
     of  grant. The following table illustrates the effect on net earnings(loss)
     and  earnings(loss)  per  share  if  the Company had applied the fair value
     recognition  provisions  of  Statement  of  Financial  Accounting
     Standards("SFAS")  No.  123,  "Accounting for Stock-Based Compensation", to
     stock-based employee compensation for the years ended December 31, 2004 and
     2003.

<TABLE>
<CAPTION>
                                                         2004        2003
                                                      -----------  ---------
<S>                                                   <C>          <C>
Net earnings(loss) as reported                        $   943,453  (304,797)
Add/deduct: Total stock-based employee compensation
  expense determined under fair-value based method
  for all awards, net of tax                               29,274  (199,575)
                                                      -----------  ---------

Pro forma net earnings(loss)                          $   972,727  (504,372)
                                                      ===========  =========
Basic and diluted earnings(loss) per share:
  As reported                                         $      1.02     (0.33)
                                                      ===========  =========
  Pro forma                                           $      1.06     (0.55)
                                                      ===========  =========
</TABLE>


                                       22
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED
     Stock-Based Compensation, continued
     -----------------------------------
     The  pro  forma  effect  of  recognizing  compensation  expense  is  an
     increase  in  net  earnings  in  2004  due to the reversal of the valuation
     allowance  related  to  deferred income tax assets discussed in note 7. The
     fair  value  of  options  granted in 2003 was $3.19. The fair value of each
     option  granted in 2003 is estimated on the date of grant using the Minimum
     Value  pricing  model with the following assumptions: dividend yield of 0%,
     risk  free  interest  rate  of  4%  and  an expected life of ten years. The
     Company did not grant any options in 2004.

     Recent Accounting Pronouncements
     --------------------------------
     In  December  2004,  the  Financial  Accounting  Standards  Board("FASB")
     adopted Statement of Financial Accounting Standards No. 123(R), Share-Based
     Payment("SFAS No. 123(R)"), which revises and amends SFAS No. 123. SFAS No.
     123(R)  requires  all  share-based  payments  to employees, including stock
     options,  to  be recognized in the financial statements based on their fair
     values.  Upon adoption, pro forma disclosure is no longer an alternative to
     financial  statement recognition. SFAS No. 123(R) will be effective for the
     Company  for  financial  statements  beginning after December 15, 2005. The
     Company  is  still evaluating the transition provisions allowed by SFAS No.
     123(R)  and  expects  to adopt its provisions in the first quarter of 2006.
     The  Company  has  not yet determined the financial statement impact of the
     pronouncement.

     In  March  2004,  The  Emerging  Issues  Task  Force("EITF")  issued  EITF
     03-1, The Meaning of Other-Than-Temporary Impairment and its Application to
     Certain  Investments("EITF  03-1").  EITF  03-1  provides  guidance  for
     evaluating  whether  an  investment is other-than-temporarily impaired. The
     disclosure  guidance  was  effective  for  other-than-temporary  impairment
     evaluations made in reporting periods beginning after June 15, 2004,whereas
     the recognition and measurement guidance has been deferred. The disclosures
     required  by EITF 03-1 are included in Note 2 to the consolidated financial
     statements.  The  Company  did  not  recognize  an  impairment  loss on any
     investment in 2004 or 2003.

     Other  accounting  standards  that  have  been  issued  or  proposed by the
     FASB and other standard setting entities that do not require adoption until
     a  future  date are not expected to have a material impact on the Company's
     consolidated financial statements upon adoption.

(2)  INVESTMENT  SECURITIES
     Investment  securities  available-for-sale  at  December  31, 2004 and 2003
     are as follows:

<TABLE>
<CAPTION>
                                           December 31, 2004
                                           -----------------
                                            Gross       Gross     Estimated
                              Amortized   Unrealized  Unrealized    Fair
                                 Cost       Gains       Losses      Value
                              ----------  ----------  ----------  ---------
<S>                           <C>         <C>         <C>         <C>
  U.S. government agencies    $5,491,527       5,614      34,241  5,462,900
  Mortgage-backed securities   1,822,886           -      13,170  1,809,716
                              ----------  ----------  ----------  ---------

                              $7,314,413       5,614      47,411  7,272,616
                              ==========  ==========  ==========  =========


                                           December 31, 2003
                                           -----------------
                                            Gross       Gross     Estimated
                              Amortized   Unrealized  Unrealized    Fair
                                 Cost       Gains       Losses      Value
                              ----------  ----------  ----------  ---------

  U.S. government agencies    $1,998,006           -       4,895  1,993,111
  Mortgage-backed securities   3,595,906           -      18,339  3,577,567
                              ----------  ----------  ----------  ---------

                              $5,593,912           -      23,234  5,570,678
                              ==========  ==========  ==========  =========
</TABLE>


                                       23
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2)  INVESTMENT  SECURITIES,  CONTINUED
     Unrealized  losses  and  fair  value,  aggregated  by  investment  category
     and length of time that individual investment securities available-for-sale
     have been in a continuous unrealized loss position, as of December 31, 2004
     are summarized as follows:

<TABLE>
<CAPTION>
                                Less than 12 Months     12 Months or More           Total
                              ----------------------  ---------------------  ---------------------
                                 Fair     Unrealized    Fair     Unrealized    Fair     Unrealized
                                Value       Losses      Value      Losses      Value      Losses
                              ----------  ----------  ---------  ----------  ---------  ----------
<S>                           <C>         <C>         <C>        <C>         <C>        <C>
  U.S. government agencies    $3,964,700      34,241          -           -  3,964,700      34,241
  Mortgage-backed securities     769,618         879  1,040,098      12,291  1,809,716      13,170
                              ----------  ----------  ---------  ----------  ---------  ----------

                              $4,734,318      35,120  1,040,098      12,291  5,774,416      47,411
                              ==========  ==========  =========  ==========  =========  ==========
</TABLE>

     At  December  31,  2004  and  2003,  unrealized  losses  in  the investment
     portfolio  related  to  debt  securities. The unrealized losses on the debt
     securities  arose  due to changing interest rates and market conditions and
     are  considered  to  be  temporary  because of acceptable investment grades
     where the repayment sources of principal and interest are largely backed by
     the  U.S. Government. At December 31, 2004, four out of six U.S. Government
     agency securities contained unrealized losses and four out of four mortgage
     backed securities contained unrealized losses. The Company did not have any
     securities  as  of  December  31,  2003 that had been in an unrealized loss
     position for greater than twelve months.

     The  amortized  cost  and  estimated  fair  value  of investment securities
     available-for-sale at December 31, 2004, by contractual maturity, are shown
     below.  Expected  maturities may differ from contractual maturities because
     borrowers have the right to call or prepay obligations with or without call
     or prepayment penalties.

<TABLE>
<CAPTION>
                                          Estimated
                              Amortized     Fair
                                 Cost       Value
                              ----------  ---------
<S>                           <C>         <C>
  Due within one year         $4,496,212  4,463,600
  Due from one to five years     995,315    999,300
  Mortgage-backed securities   1,822,886  1,809,716
                              ----------  ---------

                              $7,314,413  7,272,616
                              ==========  =========
</TABLE>

     There  were  no  sales  of  securities  available-for-sale  during 2004 and
     2003.  At  December  31, 2004 and 2003, securities with a carrying value of
     approximately  $986,000  and $996,000, respectively, were pledged to secure
     public deposits and for other purposes as required by law.

(3)  LOANS
     Major  classifications  of  loans  at  December  31,  2004  and  2003  are
     summarized as follows:

<TABLE>
<CAPTION>
                                             2004         2003
                                          -----------  ----------
<S>                                       <C>          <C>
Commercial, financial and agricultural    $11,396,239   7,843,325
Real estate - mortgage                     45,417,234  28,290,032
Real estate - construction                  8,049,926   5,164,115
Consumer                                    6,388,187   4,251,917
                                          -----------  ----------

                                           71,251,586  45,549,389

Less:   Allowance for loan losses           1,000,000     673,000
                                          -----------  ----------

                                          $70,251,586  44,876,389
                                          ===========  ==========
</TABLE>

The  Bank  grants loans and extensions of credit to individuals and a variety of
businesses and corporations located in its general trade area of Bulloch County,
Georgia.  Although  the  Bank  has  a  diversified loan portfolio, a substantial
portion  of the loan portfolio is collateralized by improved and unimproved real
estate  and  is  dependent  upon  the  real  estate  market.


                                       24
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(3)  LOANS, CONTINUED
     An  analysis  of  the  activity  in  the  allowance for loan losses for the
     years ended December 31, 2004 and 2003 is presented below:

<TABLE>
<CAPTION>
                                    2004        2003
                                 -----------  --------
<S>                              <C>          <C>
Balance at beginning of year     $  673,000   375,000
Provision charged to operations     404,865   324,390
Loans charged off                   (82,865)  (35,584)
Recoveries                            5,000     9,194
                                 -----------  --------

Balance at end of year           $1,000,000   673,000
                                 ===========  ========
</TABLE>

(4)  PREMISES  AND  EQUIPMENT
     Major  classifications  of  premises  and  equipment  as  of  December  31,
     2004 and 2003 are summarized as follows:

<TABLE>
<CAPTION>
                                   2004       2003
                                ----------  ---------
<S>                             <C>         <C>
Land                            $  869,947    869,947
Building and improvements        1,870,197  1,870,197
Furniture and equipment            551,257    361,867
                                ----------  ---------

                                 3,291,401  3,102,011
Less: Accumulated depreciation     274,615    141,479
                                ----------  ---------

                                $3,016,786  2,960,532
                                ==========  =========
</TABLE>

     Depreciation  expense  amounted  to  $133,136  and  $113,111  in  2004  and
     2003, respectively.

(5)  DEPOSITS
     Time  deposits  in  excess  of  $100,000 totaled $23,883,950 as of December
     31, 2004, and $8,219,513 as of December 31, 2003.

     At  December  31,  2004,  contractual  maturities  of  time  deposits  are
     summarized as follows:

<TABLE>
<CAPTION>
<S>        <C>
2005       $35,912,679
2006         6,294,061
2007           369,872
2008           126,542
2009         1,096,110
           -----------

           $43,799,264
           ===========
</TABLE>

     At  December  31,  2004,  the  Company  held  $6,042,000 in certificates of
     deposit  obtained  through  the  efforts  of third party brokers. The daily
     average  of  such  agreements  totaled $4,326,833 during 2004. The weighted
     average  cost  during  2004  was  2.14%, while the weighted average cost at
     December  31,  2004  was  2.19%.  The deposits as of December 31, 2004 have
     maturity  dates  ranging from April 19, 2005 to February 10, 2009. The Bank
     did  not  have  any  certificates  of  deposit obtained through third party
     brokers as of December 31, 2003.

(6)  ADVANCES  FROM  FEDERAL  HOME  LOAN  BANK
     At  December  31,  2004,  the  Bank  has  an  advance  outstanding from the
     Federal  Home  Loan  Bank of Atlanta(FHLB) in the amount of $3,000,000. The
     Bank  has pledged approximately $12,389,000 in qualifying mortgage loans as
     security  for this advance and possible future advances. This advance bears
     interest at a fixed rate of 2.01%, requires quarterly interest payments, is
     callable  on  June  20,  2005 and matures on June 18, 2007. At December 31,
     2004,  the  Bank  has  approximately  $6,911,000  in  additional  borrowing
     capacity under its borrowing arrangement with the FHLB.


                                       25
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(7)  INCOME  TAXES
     The  components  of  income  tax(benefit)  expense  for  the  years  ended
     December 31, 2004 and 2003, are as follows:

<TABLE>
<CAPTION>
                                              2004       2003
                                           ----------  ---------
<S>                                        <C>         <C>
Current                                    $ 179,502          -
Deferred                                     180,274   (113,266)
Benefit from operating loss carryforwards   (179,502)         -
Change in valuation allowance               (630,092)   113,266
                                           ----------  ---------

                                           $(449,818)         -
                                           ==========  =========
</TABLE>

     The  difference  between  income  tax  benefit  and  the amount computed by
     applying  the  statutory  federal  income tax rate to earnings(loss) before
     taxes for the years ended December 31, 2004 and 2003 is as follows:

<TABLE>
<CAPTION>
                                           2004       2003
                                        ----------  ---------
<S>                                     <C>         <C>
Pretax income(loss) at statutory rate   $ 167,836   (103,631)
State income tax expense(benefit), net      8,878    (12,192)
Change in valuation allowance            (630,092)   113,266
Other                                       3,560      2,557
                                        ----------  ---------
                                        $(449,818)         -
                                        ==========  =========
</TABLE>

     The  following  summarizes  the  components  of  deferred taxes at December
     31, 2004 and 2003.

<TABLE>
<CAPTION>
                                                                     2004      2003
                                                                   --------  ---------
<S>                                                                <C>       <C>
Deferred income tax assets:
  Allowance for loan losses                                        $297,493   242,081
  Pre-opening expenses                                               69,419   102,740
  Operating loss carryforwards and credits                           93,413   272,915
  Unrealized losses on investment securities available-for-sale      15,046     8,364
  Premises and equipment                                                  -     5,191
  Other                                                               7,810     7,165
                                                                   --------  ---------

    Total gross deferred income tax assets                          483,181   638,456
Less valuation allowance                                                  -  (630,092)
                                                                   --------  ---------

    Total deferred income tax assets                                483,181     8,364
                                                                   --------  ---------

Deferred income tax liability consisting of premises
  and equipment                                                      17,512         -
                                                                   --------  ---------

    Net deferred income tax assets                                 $465,669     8,364
                                                                   ========  =========
</TABLE>

     The  future  tax  consequences  of  the  differences  between the financial
     reporting and tax basis of the Company's assets and liabilities resulted in
     a  net  deferred  tax  asset.  Prior  to  2004,  a  valuation allowance was
     established  for  the  net  deferred tax asset, as the realization of these
     deferred  tax  assets  was dependent on future taxable income. During 2004,
     the  Company  determined that the realization of the net deferred asset was
     more  likely  than  not; therefore, the valuation allowance was eliminated.
     This  determination was based on monthly earnings and projections of future
     earnings.  As  of  December 31, 2004, the Company has federal net operating
     loss  carryforwards totaling approximately $195,000 and state net operating
     loss  carryforwards  totaling  approximately  $332,000  that  will begin to
     expire in 2021 unless previously utilized.


                                       26
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(8)  COMMITMENTS
     The  Company  has  entered  into  employment  agreements with its President
     and  Chief  Executive  Officer,  its  Chief Financial Officer and its Chief
     Credit  Officer, providing for initial terms of three years. The agreements
     provide  for  base  salaries,  incentive  bonuses  based  on  the Company's
     performance,  stock  options, and other perquisites commensurate with their
     employment.

     The  Bank  is  a  party  to  financial  instruments  with off-balance sheet
     risk  in  the  normal course of business to meet the financing needs of its
     customers. These financial instruments include commitments to extend credit
     and  standby  letters  of  credit.  These  instruments  involve, to varying
     degrees, elements of credit risk in excess of the amounts recognized in the
     consolidated  balance  sheets.  The  contract  amounts of these instruments
     reflect  the  extent  of  involvement the Bank has in particular classes of
     financial instruments.

     Commitments  to  extend  credit  are  agreements  to  lend to a customer as
     long as there is no violation of any condition established in the contract.
     Commitments  generally  have  fixed  expiration  dates or other termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected  to  expire without being drawn upon, the total commitment amounts
     do  not  necessarily represent future cash requirements. The Bank evaluates
     each  customer's  creditworthiness  on  a case-by-case basis. The amount of
     collateral  obtained,  if  deemed  necessary  by the Bank upon extension of
     credit, is based on management's credit evaluation of the counterparty. The
     Bank's  loans  are  primarily  collateralized by residential and other real
     properties,  automobiles,  savings deposits, accounts receivable, inventory
     and equipment.

     Standby  letters  of  credit  are  written  conditional  commitments issued
     by  the  Bank  to guarantee the performance of a customer to a third party.
     Those  guarantees  are  primarily  issued  to  support  public  and private
     borrowing  arrangements.  Most  letters  of credit extend for less than one
     year.  The credit risk involved in issuing letters of credit is essentially
     the  same  as  that involved in extending loan facilities to customers. The
     Bank had no outstanding letters of credit at December 31, 2004 or 2003.

     The  Bank's  exposure  to  credit  loss  in  the event of nonperformance by
     the  other  party  to  the  financial  instrument for commitments to extend
     credit  and  standby  letters  of  credit is represented by the contractual
     amount  of  those  instruments.  The  Bank uses the same credit policies in
     making  commitments  and  conditional obligations as it does for on-balance
     sheet instruments.

<TABLE>
<CAPTION>
                                                 2004        2003
                                              -----------  ---------
<S>                                           <C>          <C>
Financial instruments whose contract amounts
  represent credit risk:
    Commitments to extend credit              $11,911,495  6,153,648
</TABLE>

     The  Bank  maintains  relationships  with  correspondent  banks  that  can
     provide  funds  to  it  on short notice, if needed. Presently, the Bank has
     arrangements  with commercial banks for short term unsecured advances up to
     $2,000,000.

(9)  EMPLOYEE  AND  DIRECTOR  BENEFIT  PLANS
     Defined Contribution Plan
     -------------------------
     During  2003,  the  Company  adopted  a  401(k)  savings  plan  under which
     eligible  employees may choose to save up to 15 percent of salary income on
     a pre-tax basis, subject to certain IRS limits. Under the plan, the Company
     can make additional discretionary contributions, as determined by the Board
     of Directors. During 2004 and 2003, the Company made no plan contributions.

     Stock Option Plan and Warrants
     ------------------------------
     The  Company  sponsors  an  employee  stock  incentive  plan.  The plan was
     adopted  for  the benefit of directors, key officers and employees in order
     that  they  may  purchase Company stock at a price equal to the fair market
     value  on  the  date  of grant. A total of 137,770 shares were reserved for
     possible  issuance  under  the plan. The options vest over one to five-year
     periods and expire after ten years.


                                       27
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(9)  EMPLOYEE  AND  DIRECTOR  BENEFIT  PLANS,  CONTINUED
     Stock Option Plan and Warrants, continued
     ----------------------------------------------
     In  connection  with  the  Company's  formation  and  initial  offering,
     188,708  warrants  for  shares  were issued to the organizers. The warrants
     were  issued at the initial offering price of $10 per share and vest evenly
     over  a  five-year period. The warrants will be exercisable for a period of
     ten  years  following  issuance,  but  generally no later than three months
     after the holder ceases to serve as a director.

     A  summary  of  activity  in  the  directors'  warrants  and  stock  option
     plans for the years ended December 31, 2004 and 2003 is presented below:

<TABLE>
<CAPTION>
                                      2004                 2003
                                ------------------  -------------------
                                         Weighted             Weighted
                                          Average              Average
                                         Exercise             Exercise
                                Shares     Price     Shares     Price
                                -------  ---------  --------  ---------
<S>                             <C>      <C>        <C>       <C>
Outstanding, beginning of year  282,262  $   10.00  283,262   $   10.00
Exercised during the year             -          -   (1,000)      10.00
                                -------             --------

Outstanding, end of year        282,262      10.00  282,262       10.00
                                =======             ========

Exercisable, end of year        125,125      10.00   62,663       10.00
                                =======             ========
</TABLE>

     The  options  and  warrants  outstanding  have a weighted average remaining
     contractual life of approximately seven years as of December 31, 2004.

(10) SHAREHOLDERS'  EQUITY
     Shares  of  preferred  stock  may  be  issued  from  time to time in one or
     more  series  as established by resolution of the Board of Directors of the
     Company,  up  to  a  maximum  of  10,000,000  shares. Each resolution shall
     include  the  number  of  shares  issued,  preferences,  special rights and
     limitations as determined by the Board.

(11) RELATED  PARTY  TRANSACTIONS
     The  Bank  conducts  transactions  with  directors  and officers, including
     companies in which they have a beneficial interest, in the normal course of
     business.  It  is the Bank's policy to comply with federal regulations that
     require  that  loan  and  deposit transactions with directors and executive
     officers be made on substantially the same terms as those prevailing at the
     time  made  for  comparable  loans  and  deposits  to  other persons. As of
     December  31,  2004  and  2003,  there  were  approximately  $3,437,000 and
     $6,362,000, respectively, of related party deposits. Following is a summary
     of related party loans for the year ended December 31, 2004:

<TABLE>
<CAPTION>
<S>                           <C>
Beginning balance             $ 3,633,823
New loans/advances                788,194
Less: Repayments               (1,686,077)
                              ------------

Balance at December 31, 2004  $ 2,735,940
                              ============
</TABLE>

(12) MISCELLANEOUS  OPERATING  EXPENSES
     Components  of  other  operating  expenses  which  are  greater  than 1% of
     interest income and other operating income for the years ended December 31,
     2004 and 2003 are as follows:

<TABLE>
<CAPTION>
                               2004     2003
                             --------  -------
<S>                          <C>       <C>
Advertising                  $134,622   96,937
Audits and examinations        76,389   62,780
Business development           57,799   48,205
Mortgage expenditures          24,417   47,742
Data processing               193,168  136,223
FDIC, OCC, State Assessment    42,378   31,403
Legal and professional         57,976   32,144
Stationery and supplies        62,544   56,533
Telephone                      35,874   29,963
Regulatory fees                41,378   31,403
Computer maintenance           36,317   30,755
</TABLE>


                                       28
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) REGULATORY  MATTERS
     The  Company  and  the  Bank  are  subject  to  various  regulatory capital
     requirements  administered by the federal banking agencies. Failure to meet
     minimum  capital  requirements  can initiate certain mandatory and possibly
     additional  discretionary  actions by regulators that, if undertaken, could
     have  a  direct  material effect on the financial statements. Under certain
     adequacy  guidelines  and  the  regulatory  framework for prompt corrective
     action,  specific  capital guidelines that involve quantitative measures of
     the  assets, liabilities, and certain off-balance sheet items as calculated
     under  regulatory accounting practices must be met. The capital amounts and
     classifications are also subject to qualitative judgments by the regulators
     about components, risk weightings, and other factors.

     Quantitative  measures  established  by  regulation  to  ensure  capital
     adequacy  require  the Company and the Bank to maintain minimum amounts and
     ratios(set forth in the table below) of Total and Tier 1 Capital(as defined
     in  the  regulations)  to  risk-weighted  assets(as defined), and of Tier 1
     Capital(as  defined) to average assets(as defined). Management believes, as
     of  December  31,  2004  and  2003,  that the Company and the Bank meet all
     capital adequacy requirements to which they are subject.

     As  of  December  31,  2004  and  2003,  the  most recent notification from
     the  Federal  Deposit  Insurance  Corporation  categorized the Bank as well
     capitalized under the regulatory framework for prompt corrective action. To
     be  categorized  as  well capitalized, the Bank must maintain minimum total
     risk-based,  Tier  1  risk-based and Tier 1 leverage ratios as set forth in
     the  table below. There are no conditions or events since that notification
     that management believes have changed the Bank's category.

     The  actual  capital  amounts(in  thousands)  and ratios as of December 31,
     2004 and 2003 are also presented in the table below:

<TABLE>
<CAPTION>
                                                                                        To Be Well
                                                                                     Capitalized Under
                                                                  For Capital        Prompt Corrective
                                               Actual          Adequacy Purposes     Action Provisions
                                         ------------------  --------------------  ----------------------
                                          Amount    Ratio       Amount     Ratio    Amount       Ratio
                                         -------  ---------  ------------  ------  ---------  -----------
AS OF DECEMBER 31, 2004:
Total Capital(to Risk Weighted Assets)
<S>                                      <C>      <C>        <C>           <C>     <C>        <C>
  Consolidated                           $ 9,408     11.77%  $      6,392   8.00%        N/A        N/A
  Bank                                   $ 8,531     10.68%  $      6,392   8.00%  $   7,990       10.00%
Tier 1 Capital(to Risk Weighted Assets)
  Consolidated                           $ 8,408     10.52%  $      3,196   4.00%        N/A        N/A
  Bank                                   $ 7,531      9.43%  $      3,196   4.00%  $   4,794        6.00%
Tier 1 Capital(to Average Assets)
  Consolidated                           $ 8,408      9.41%  $      3,573   4.00%        N/A        N/A
  Bank                                   $ 7,531      8.43%  $      3,573   4.00%  $   4,466        5.00%
AS OF DECEMBER 31, 2003:
Total Capital(to Risk Weighted Assets)
  Consolidated                           $ 8,018     15.48%  $      4,144   8.00%        N/A        N/A
  Bank                                   $ 6,037     11.65%  $      4,144   8.00%  $   5,180       10.00%
Tier 1 Capital(to Risk Weighted Assets)
  Consolidated                           $ 7,449     14.38%  $      2,072   4.00%        N/A        N/A
  Bank                                   $ 5,468     10.56%  $      2,072   4.00%  $   3,108        6.00%
Tier 1 Capital(to Average Assets)
  Consolidated                           $ 7,449     13.76%  $      2,165   4.00%        N/A        N/A
  Bank                                   $ 5,468     10.10%  $      2,165   4.00%  $   2,706        5.00%
</TABLE>


                                       29
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) REGULATORY  MATTERS,  CONTINUED
     Dividends  paid  by  the  Bank  are  the  primary source of funds available
     to  the Company. Banking regulations limit the amount of dividends that may
     be  paid  without  prior  approval  of  the  regulatory  authorities. These
     restrictions  are  based  on the level of regulatory classified assets, the
     prior years' net earnings, and the ratio of equity capital to total assets.
     The  Bank is currently not allowed to pay dividends to the Company until it
     becomes cumulatively profitable.

(14) FIRST SOUTHERN BANCORP(PARENT COMPANY ONLY) FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                          Balance Sheets

                    December 31, 2004 and 2003

                              Assets
                              ------

                                                        2004       2003
                                                     ----------  ---------
<S>                                                  <C>         <C>
Cash and interest-bearing deposits                   $  414,177  1,730,492
Land                                                    265,448    265,448
Other assets                                            170,806          -
Investment in Bank                                    7,530,690  5,453,608
                                                     ----------  ---------

                                                     $8,381,121  7,449,548
                                                     ==========  =========

               Liabilities and Shareholders' Equity
               ------------------------------------

Shareholders' equity                                 $8,381,121  7,449,458
                                                     ==========  =========
</TABLE>


                            Statements of Operations

                 For the Years Ended December 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                          2004       2003
                                                                        ---------  ---------

Other operating expense                                                  $16,315    25,988
                                                                        ---------  ---------
<S>                                                                     <C>        <C>
  Loss before income tax benefit and equity in undistributed
    earnings(loss) of Bank                                               (16,315)   (25,988)
Income tax benefit                                                       170,806          -
                                                                        ---------  ---------
  Earnings(loss) before equity in undistributed earnings(loss) of Bank   154,491    (25,988)
                                                                        ---------  ---------

  Equity in undistributed earnings(loss) of Bank                         788,962   (278,809)
                                                                        ---------  ---------

    Net loss                                                            $943,453   (304,797)
                                                                        =========  =========
</TABLE>


                                       30
<PAGE>
                      FIRST SOUTHERN BANCORP AND SUBSIDIARY

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(14) FIRST SOUTHERN BANCORP(PARENT COMPANY ONLY) FINANCIAL INFORMATION,
     CONTINUED

                            Statements of Cash Flows

                 For the Years Ended December 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                       2004         2003
                                                                   ------------  ----------
<S>                                                                <C>           <C>
Cash flows from operating activities:
  Net earnings(loss)                                               $   943,453    (304,797)
  Adjustments to reconcile net earnings(loss) to net cash
    used by operating activities:
      Equity in undistributed(earnings) loss of Bank                  (788,962)    278,809
      Change in other assets                                          (170,806)        (50)
                                                                   ------------  ----------

              Net cash used by operating activities                    (16,315)    (26,038)
                                                                   ------------  ----------

Cash flows from investing activities:
  Capital infusion to Bank                                          (1,300,000)          -
  Purchase of land                                                           -    (265,448)
                                                                   ------------  ----------

              Net cash used by investing activities                 (1,300,000)   (265,448)
                                                                   ------------  ----------

Cash flows from financing activities consisting of proceeds from
    exercise of stock options                                                -      10,000
                                                                   ------------  ----------

Net change in cash                                                  (1,316,315)   (281,486)

Cash at beginning of year                                            1,730,492   2,011,978
                                                                   ------------  ----------

Cash at end of year                                                $   414,177   1,730,492
                                                                   ============  ==========
</TABLE>


                                       31
<PAGE>
<TABLE>
<CAPTION>
                                  CORPORATE AND SHAREHOLDER INFORMATION

--------------------------------------------------------------------------------------------------------------
                                                DIRECTORS
--------------------------------------------------------------------------------------------------------------

<S>                                      <C>                                   <C>
MICHAEL R. ANDERSON                      CHARLES A. DEAL                       WILLIAM I. GRIFFIS
President                                Senior Partner                        President
Bulloch County Fertilizer Company, Inc.  Cross Creek Farms                     Georgia Southern University
                                                                               Foundation, Inc.
                                                                               Vice President for
                                                                               Advancement
                                                                               Georgia Southern University

TRACY D. HAM                             JAMES A. HIGH, DDS                    W. PRATT HILL, III
Head Football Coach                      Orthodontist                          Partner
Clark Atlanta University                                                       Lee, Hill & Johnston Insurers
President
Hambone Enterprises

MICHAEL R. KENNEDY                       R. WHITMAN LORD, O.D.                 LAURA TAULBEE MARSH
President                                President                             Partner
Kennedy Industries, Inc.                 Lord Eye Centers, Inc.                Franklin, Taulbee, Rushing,
                                                                               Snipes & Marsh, P.C.

JEFFREY D. POPE                          RONNIE J. POPE                        HUDSON J. POWELL, SR., DMD
President and Co-Owner                   President                             General Dentistry
Pope Construction Co., Inc.              R.J. Pope Traditional Menswear, Inc.
                                         and Cobblers Bench, Inc.

LAMAR O. REDDICK                         DEVRA P. WALKER, CPA                  L. ANTHONY WATERS, III
Retired Business Owner                   Business Owner                        Business Owner
Lamar O. Reddick & Associates            Walker Pharmacy & Gift Shop,          L.A. Waters Furniture Co., Inc.
                                         Little Doses Children's Wear,
                                         The Wash Room and
                                         Brooklet Drug

F. THOMAS DAVID
President and Chief Executive Officer
First Southern Bancorp
President and Chief Executive Officer
First Southern National Bank

--------------------------------------------------------------------------------------------------------------
                                                 OFFICERS
--------------------------------------------------------------------------------------------------------------
OFFICERS

F. THOMAS DAVID                          CHARLES R. FENNELL, JR.               CHRISTOPHER T. CLIETT
President and Chief Executive Officer    Chief Financial Officer               Senior Vice President and
                                                                               Chief Credit Officer
</TABLE>



A  COPY  OF  THE  COMPANY'S  2004  ANNUAL  REPORT ON FORM 10-KSB, FILED WITH THE
SECURITIES  AND  EXCHANGE  COMMISSION,  IS  AVAILABLE  AT  NO  CHARGE  TO  EACH
SHAREHOLDER  UPON  WRITTEN  REQUEST TO F. THOMAS DAVID, PRESIDENT AND CEO, FIRST
SOUTHERN BANCORP, 201 SOUTH MAIN STREET, STATESBORO, GEORGIA 30458.


                                       32
<PAGE>