UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                    FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934

    For the quarterly period ended                   June 30, 1997
                                         -------------------------------

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the transition period from                           to



                        Commission File Number: 33-14252

                      FIRST NATIONAL BANKSHARES CORPORATION
             (Exact name of registrant as specified in its charter)



        West Virginia                                       62-1306172
(State or other jurisdiction                                (I.R.S. Employer
     of incorporation)                                      Identification No.)


One Cedar Street, Ronceverte, West Virginia                 24970
(Address of principal executive offices)                    (Zip Code)

                                 (304) 647-4500
              (Registrant's telephone number, including area code)


                                       N/A
       (Former name,address and fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

The number of shares  outstanding of the issuer's  classes of common stock as of
June 30, 1997:

                  Common Stock, $5 par value -- 192,500 shares






                          THIS REPORT CONTAINS 25 PAGES


<PAGE>





                      FIRST NATIONAL BANKSHARES CORPORATION

                                    FORM 10-Q
                  For the Quarterly Period Ended June 30, 1997

                                      INDEX



                                                                           Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996                                        3

Condensed Consolidated Statements of Income -
Three Months Ended June 30, 1997 and 1996 and
Six Months Ended June 30, 1997 and 1996                                    4

Condensed Consolidated Statements of Shareholders' Equity -
Three Months Ended June 30, 1997 and 1996 and
Six Months Ended June 30, 1997 and 1996                                    5

Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996                                    6-7

Notes to Condensed Consolidated Financial Statements                       8-11


Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations                                                  12-20



PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                  21

Item 2. Changes in Securities                                              none

Item 3. Defaults upon Senior Securities                                    none

Item 4. Submission of Matters to a Vote of Security Holders                21

Item 5. Other Information                                                  21

Item 6. Exhibits and Reports on Form 8-K                                   21



SIGNATURES                                                                 22


                                        2

<PAGE>



PART I.  FINANCIAL INFORMATION

              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                (in thousands of dollars, except per share data)


                                                            June 30,     Dec 31,
                                                               1997        1996
ASSETS                                                    (Unaudited)       (1)

Cash and due from banks .................................   $  2,858    $  2,576
Federal funds sold ......................................      2,465       2,663
Securities held to maturity (estimated fair value
     $15,844 and $18,850, respectively) (Note 2) ........     15,821      18,836
Securities available for sale (Note 2) ..................      3,048       3,782
Loans, net of allowance of $643 and
      $654, respectively (Notes 3 and 4) ................     63,583      52,800
Bank premises and equipment .............................      2,096       1,965
Accrued interest receivable .............................        712         659
Other assets ............................................        383         387
                                                            --------    --------

              Total assets ..............................   $ 90,966    $ 83,668
                                                            ========    ========



LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
     Deposits:
          Noninterest bearing ...........................   $  9,558    $ 10,211
          Interest bearing ..............................     65,619      63,105
                                                            --------    --------
              Total deposits ............................     75,177      73,316
     Repurchase Agreements ..............................        881         493
     Long-term borrowings (Note 7) ......................      5,000           0
     Other liabilities ..................................        873       1,018
                                                            --------    --------

              Total liabilities .........................     81,931      74,827
                                                            --------    --------

Commitments and Contingencies (Note 5)

Shareholders' equity
     Common stock, $5.00 par value, authorized
          500,000 shares, issued 192,500 shares .........        963         963
     Surplus ............................................      1,000       1,000
     Retained earnings ..................................      7,076       6,878
     Net Unrealized gain (loss) on securities ...........         (4)          0
                                                            --------    --------
              Total shareholders' equity ................      9,035       8,841
                                                            --------    --------

              Total liabilities and shareholders' equity    $ 90,966    $ 83,668
                                                            ========    ========





(1) Extracted from December 31, 1996 audited financial statements.


            See Notes to Condensed Consolidated Financial Statements

                                                           3

<PAGE>




              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                (In thousands of dollars, except per share data)


                                                 Three Mos Ended   Six Mos Ended
                                                    June 30,           June 30,
                                                 1997     1996     1997     1996

Interest Income
     Interest and fees on loans ............   $1,455   $1,145   $2,756   $2,260
     Interest and dividends on securities:
          Taxable ..........................      226      290      470      556
          Tax-exempt .......................       50       53      100      107
     Interest on Federal funds sold ........       22       46       34       88
                                               ------   ------   ------   ------
          Total interest income ............    1,753    1,534    3,360    3,011
                                               ------   ------   ------   ------

Interest Expense
     Interest on deposits ..................      674      587    1,299    1,158
     Interest on Repurchase Agreements .....        8        1       14        1
     Interest on Fed Funds Purchased .......        1        0        5        0
     Interest on Long-term Borrowings ......       85        0       91        0
                                               ------   ------   ------   ------
          Total Interest Expense ...........      768      588    1,409    1,159

          Net interest income ..............      985      946    1,951    1,852

Provision for loan losses ..................       13        0       13        0
                                               ------   ------   ------   ------

          Net interest income after
              provision for loan losses ....      972      946    1,938    1,852
                                               ------   ------   ------   ------

Other income
     Service fees ..........................       65       60      136       98
     Insurance commissions .................        5        6        9       11
     Securities gains ......................        0        0        0        1
     Trust income ..........................        5       19       12       40
     Other income ..........................       28       27       46       56
                                               ------   ------   ------   ------
                                                  103      112      203      206
                                               ------   ------   ------   ------

Other expense
     Salaries and employee benefits ........      430      394      856      755
     Net occupancy expense .................       67       46      119       95
     Equipment rental, depreciation
              and maintenance ..............       73       57      140      113
     Other operating expenses ..............      215      266      486      529
                                               ------   ------   ------   ------
                                                  785      763    1,601    1,492
                                               ------   ------   ------   ------

Income before income taxes .................      290      295      540      566

     Income tax expense ....................      102       81      188      163
                                               ------   ------   ------   ------

          Net income .......................   $  188   $  214   $  352   $  403
                                               ======   ======   ======   ======

Earnings per common share (Note 6) .........   $ 0.98   $ 1.11   $ 1.83   $ 2.09
                                               ======   ======   ======   ======

Dividends per common share .................   $ 0.40   $ 0.33   $  .80   $ 0.66
                                               ======   ======   ======   ======


            See Notes to Condensed Consolidated Financial Statements

                                        4

<PAGE>




              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY
            CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)
                (In thousands of dollars, except per share data)


                                         Three Months Ended     Six Months Ended
                                               June 30,             June 30,
                                          1997       1996       1997       1996

Balance, beginning of period .......   $ 8,914    $ 8,510    $ 8,841    $ 8,416

     Net income ....................       188        214        352        403

     Cash dividends declared .......       (77)       (63)      (154)      (126)

     Change in net unrealized gain
       (loss) on securities
        available for sale .........        10        (13)        (4)       (45)
                                       -------    -------    -------    -------

Balance, end of period .............   $ 9,035    $ 8,648    $ 9,035    $ 8,648
                                       =======    =======    =======    =======


































            See Notes to Condensed Consolidated Financial Statements

                                        5

<PAGE>



              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                            (In thousands of dollars)

                                                               Six Months Ended
                                                                       June 30,
                                                                   1997    1996
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income .............................................   $    352 $   403
     Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
          Depreciation ......................................        113      75
          Provision for loan losses .........................         13       0
          Amortization of security premiums (accretion) of
              security discounts, net .......................        (28)     11
          (Gain) Loss on disposal of assets .................         (2)      0
          (Increase) Decrease in accrued interest receivable         (53)     75
          (Increase) Decrease in other assets ...............       (140)   217)
          Increase (Decrease) in other liabilities ..........       (279)     66
                                                                --------  ------

          Net cash provided by (used in) operating activities        (24)    401
                                                                --------  ------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from maturities and calls of securities held
          to maturity .......................................      3,235   1,272
     Proceeds from maturities and calls of securities
          available for sale ................................      1,000   4,141
     Purchases of securities held to maturity ...............       (195)(6,941)
     Purchases of securities available for sale .............          0       0
     Principal collected on (loans made to) customers, net ..    (10,783)(1,569)
     Purchases of bank premises and equipment ...............       (244)  (614)
                                                                -------- -------


          Net cash provided by (used in) investing activities     (6,987)(3,711)
                                                                -------- -------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase (decrease) in demand deposits, NOW
          and savings accounts ..............................     (1,055)  2,316
     Proceeds from sales of (payments for matured)
          time deposits, net ................................      2,916     660
     Net increase (decrease) in Repurchase Agreements .......        388     149
     Proceeds from long-term borrowings .....................      5,000       0
     Dividends paid .........................................       (154)  (126)
                                                                -------- -------

          Net cash provided by (used in) financing activities      7,095   3,011
                                                                -------- -------

          Increase (decrease) in cash and cash equivalents ..   $     84 $ (299)

Cash and cash equivalents:
     Beginning ..............................................   $  5,239 $ 3,614
                                                                -------- -------

     Ending .................................................   $  5,323 $ 3,315
                                                                ======== =======

                                   (Continued)
            See Notes to Condensed Consolidated Financial Statements

                                        6

<PAGE>




              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
                                   (Unaudited)
                            (In thousands of dollars)

                                                              Six Months Ended
                                                                  June 30,
                                                               1997      1996
                                                             ------   -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash payments for:
          Interest paid to depositors .......................$1,418   $1,175
                                                             ======   ======

          Income taxes ......................................$  262   $  211
                                                             ======   ======


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

     Dividends declared and unpaid ..........................$   77   $   63
                                                             ======   ======







































            See Notes to Condensed Consolidated Financial Statements

                                        7

<PAGE>




              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.       Basis of Presentation
              The accounting and reporting policies of First National Bankshares
              Corporation and Subsidiary  (the  "Company")  conform to generally
              accepted accounting  principles and to general policies within the
              financial   services   industry.   The  preparation  of  financial
              statements  in  conformity  with  generally  accepted   accounting
              principles  requires  management to make estimates and assumptions
              that affect the  reported  amounts of assets and  liabilities  and
              disclosure of contingent assets and liabilities at the date of the
              financial  statements  and the  reported  amounts of revenues  and
              expenses during the reporting period.  Actual results could differ
              from those estimates.

              The condensed consolidated  statements include the accounts of the
              Company and its wholly-owned subsidiary,  First National Bank. All
              significant  intercompany  balances  and  transactions  have  been
              eliminated.   The   information   contained   in   the   condensed
              consolidated   financial  statements  is  unaudited  except  where
              indicated.  In the opinion of management,  all  adjustments  for a
              fair  presentation of the results of the interim periods have been
              made. All such adjustments were of a normal, recurring nature. The
              results of operations  for the three and six months ended June 30,
              1997 are not necessarily  indicative of the results to be expected
              for the full year. The condensed consolidated financial statements
              and notes included  herein should be read in conjunction  with the
              Company's 1996 audited financial statements and Form 10-K.

              Certain amounts in the condensed consolidated financial statements
              for  the  prior  year,   as   previously   presented,   have  been
              reclassified to conform to current year classifications.

Note 2.       Securities
              The  amortized  cost,  unrealized  gains,  unrealized  losses  and
              estimated  fair values of securities at June 30, 1997 and December
              31, 1996 are summarized as follows (in thousands):
<TABLE>
<CAPTION>                                        June 30, 1997
                                                   Estimated
                              Amortized   Unrealized    Unrealized       Fair
                            Cost         Gains        Losses          Value
              <S>             <C>          <C>           <C>            <C> 
              Held to maturity:
                  Taxable:
                         $     3,000  $         1   $         0    $     3,001
              U.S. Government Agencies
              and corp         8,231            6            13          8,224
              Corporate Debt
              Securities         500            0             6            494
                           -----------  -----------   -----------    -----------
              Total Taxable   11,731            7            19         11,719

                  Tax Exempt:
             State &
     political subdivisions    4,090           45            10          4,125
                        -----------  -----------   -----------    -----------

    Total securities
    held to maturity     $    15,821  $        52   $        29    $    15,844
                        ===========  ===========   ===========    ===========
</TABLE>
                                                           8

<PAGE>




              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              June 30, 1997
                                                                Estimated
                           Amortized    Unrealized    Unrealized       Fair
                           Cost          Gains        Losses          Value
  <S>                         <C>          <C>           <C>            <C> 
   Available for Sale:
   Taxable:
   U.S. Treasury Securities  985   $         1   $         0    $       986
   U.S. Government Agencies
 and corporations          1,500             0             7          1,493
 Federal Home Loan Bank Stock 510             0             0            510
  Federal Reserve Bank Stock   57             0             0             57
                        ----------   -----------   -----------    -----------
 Total Taxable               3,052             1             7          3,046

   Tax Exempt:
Federal Reserve Bank Stock       2             0             0              2
                         ----------   -----------   -----------    -----------

 Total securities
 available for sale     $    3,054   $         1   $         7    $     3,048
                         ==========   ===========   ===========    ===========


                                                        December 31, 1996
                                                            Estimated
                          Amortized    Unrealized    Unrealized       Fair
                          Cost          Gains        Losses          Value
  Held to maturity:
  Taxable:
 U.S. Treasury Securities$  3,003   $         2   $        0     $     3,005
  U.S. Government Agencies
and corporations           11,203            20            31         11,192
 Corporate Debt Securities    500             0             7            493
                        ----------   -----------   -----------    -----------
Total Taxable              14,706            22            38         14,690

Tax Exempt:
State & political
 subdivisions               4,130            44            14          4,160
                        ----------   -----------   -----------    -----------

  Total securities
 held to maturity      $   18,836   $        66   $        52    $    18,850
                        ==========   ===========   ===========    ===========


                                                       December 31, 1996
                                                           Estimated
                         Amortized    Unrealized    Unrealized       Fair
                          Cost          Gains        Losses          Value
 Available for Sale:
 Taxable:
U.S. Treasury Securities $      980   $         3   $         0    $       983
 U.S. Government Agencies
 and corporations              2,500             6             8          2,498
 Federal Home Loan Bank Stock    242             0             0            242
  Federal Reserve Bank Stock      57             0             0             57
                           ----------   -----------   -----------    -----------
 Total Taxable                 3,779             8             8          3,780

 Tax Exempt:
 Federal Reserve Bank Stock        2             0             0              2
                        ----------   -----------   -----------    -----------

  Total securities
 available for sale      $    3,781   $         8   $         8    $     3,782
                        ==========   ===========   ===========    ===========


</TABLE>

                                                           9

<PAGE>






              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The  maturities,  amortized  cost and  estimated  fair  values of the  Company's
securities at June 30, 1997 are summarized as follows (in thousands):

                                  Held to Maturity     Available for Sale
                                          Estimated             Estimated
                               Amortized       Fair   Amortized      Fair
                                    Cost      Value        Cost     Value
 
Due within 1 year .............   $ 8,350   $ 8,357     $     0   $     0
Due after 1 but within 5 years      4,462     4,447       2,485     2,479
Due after 5 but within 10 years     3,009     3,040           0         0
Equity Securities .............         0         0         569       569
                                  -------   -------     -------   -------
                                  $15,821   $15,844     $ 3,054   $ 3,048
                                  =======   =======     =======   =======

     The Company's  Federal  Reserve Bank stock and Federal Home Loan Bank stock
     are equity  securities which are included in securities  available for sale
     in the  accompanying  condensed  consolidated  financial  statements.  Such
     securities  are  carried  at cost,  since they may only be sold back to the
     respective Federal Reserve or Federal Home Loan Bank at par value.

     The proceeds from sales and calls and maturities of  securities,  including
     principal payments received on  mortgage-backed  securities and the related
     gross gains and losses  realized for the six month  periods  ended June 30,
     1997 and 1996 are as follows (in thousands):

                                           Proceeds From         Gross Realized
                                            Calls and    Prin
                                     Sales  Maturities  Pymnts   Gains   Losses

Six months ended June 30, 1997
    Securities held to maturity .   $    0   $3,235   $    0   $    0   $    0
    Securities available for sale        0    1,000        0        0        0
                                    ------   ------   ------   ------   ------
                                    $    0   $4,235   $    0   $    0   $    0
                                    ======   ======   ======   ======   ======

Six months ended June 30, 1996:
    Securities held to maturity .   $    0   $1,272   $    0   $    0   $    0
    Securities available for sale        0    4,141        0        0        0
                                    ------   ------   ------   ------   ------
                                    $    0   $5,413   $    0   $    0   $    0
                                    ======   ======   ======   ======   ======

Note 3.       Loans
              Total  loans  as of June  30,  1997  and  December  31,  1996  are
summarized as follows (in thousands):

                                          June 30,    Dec 31,
                                            1997        1996
                                        ---------   ---------
Commercial, financial and agricultural   $ 25,793    $ 19,578
Real estate - construction ...........      2,848       2,396
Real estate - mortgage ...............     25,691      24,031
Installment loans to individuals .....      8,511       6,254
Other ................................      1,419       1,300
                                         --------    --------
    Total loans ......................     64,262      53,559

Less unearned income .................        (36)       (105)
                                         --------    --------
    Total loans net of unearned income     64,226      53,454

Less allowance for loan losses .......       (643)       (654)
                                         --------    --------
        Loans, net ...................   $ 63,583    $ 52,800
                                         ========    ========


                                                           10

<PAGE>



              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 4.       Allowance for Loan Losses
              Analyses of the allowance for loan losses are presented  below (in
              thousands) for the six month periods ended June 30, 1997 and 1996:

                                    Six Months Ended
                                         June 30,
                                       1997    1996
                                    -------- --------
     Balance, beginning of period    $ 654    $ 643
                                    -------- --------

         Loans charged off .......     (51)    (160)
         Recoveries ..............      27      108
                                     -----    -----
             Net losses ..........     (24)     (52)
                                     -----    -----

         Provision for loan losses      13        0
                                     -----    -----

     Balance, end of period ......   $ 643    $ 591
                                     =====    =====


Note 5.       Commitments and Contingencies
              The Company's  subsidiary  bank is, through the ordinary course of
              business,  party to financial  instruments with off-balance  sheet
              risk.  These  financial  instruments  include  standby  letters of
              credit and  commitments to extend credit.  The contract  amount of
              unused portions of existing Lines of Credit and other  commitments
              to lend as of June 30, 1997 and 1996 are as follows,  in thousands
              of dollars:
                                                           June 30,
                                                          1997         1996
                                                   -----------   ----------

              Commitments to extend credit         $     9,291   $    6,795
                                                   ===========   ==========

              Management is not aware of any commitments or contingencies  which
              may reasonably be expected to have a material  impact on operating
              results,  liquidity or capital resources. The Company continues to
              have commitments related to various legal actions,  commitments to
              extend  credit,  and  employment  contracts  arising in the normal
              course of business.

Note 6.       Earnings Per Share
              Earnings   per   common   share   are   computed   based   on  the
              weighted-average  shares  outstanding.  For the six month  periods
              ended June 30, 1997 and 1996, the  weighted-average  common shares
              outstanding  was  192,500.  The  weighted  average  common  shares
              outstanding  for the  three  month  periods  then  ended  was also
              192,500.

Note 7.       Long-Term Borrowings
              The Company's subsidiary bank is a member of the Federal Home Loan
              Bank of Pittsburgh,  Pennsylvania ("FHLB"). On March 24, 1997, the
              Bank entered into a long-term borrowing  arrangement with the FHLB
              of  Pittsburgh.  This  advance  is secured by stock in the FHLB of
              Pittsburgh,   qualifying   first  mortgage  loans  and  investment
              securities  not otherwise  pledged.  The advance is payable in one
              balloon payment on March 24, 2000.  Interest is payable monthly at
              a fixed rate of 6.68% per annum.




                                                           11

<PAGE>



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

The following is a discussion and analysis focused on significant changes in the
financial  condition  and results of  operations  of First  National  Bankshares
Corporation  (the "Company" ), and its  subsidiary,  First National Bank for the
periods  indicated.  This  discussion and analysis should be read in conjunction
with the Company's 1996 consolidated  financial statements and notes included in
its Annual Report to  Shareholders  and Form 10-K.  This  discussion may include
forward-looking  statements  based upon  management's  expectations,  and actual
results may differ materially.


EARNINGS SUMMARY
The Company  reported net income of $188,000 for the three months ended June 30,
1997  compared to $214,000 for the quarter ended June 30, 1996,  representing  a
12.2% decrease.  For the six month period ended June 30, 1997, the Company's net
income of  $352,000  decreased  12.7% from the  $403,000  reported  for the same
period of 1996.  The  decreases  in quarterly  and  year-to-date  earnings  were
primarily  attributable  to an increased loan loss  provision,  decreased  trust
income and increased  non-interest  expense as further discussed in the analysis
below.

Earning per common share were $0.98 for the quarter ended June 30, 1997 compared
to the $1.11 reported for the second  quarter of 1996, a decrease of 11.7%.  For
the six month  period ended June 30,  1997,  earnings  per common share  totaled
$1.83  compared with $2.09 for the same period of 1996, a decrease of 12.4%.  An
analysis of the  contribution of each major component of the statement of income
to earnings  per share is presented  in the  following  chart both for the three
month and for the six month periods ended June 30, 1997 and 1996.

<TABLE>
<CAPTION>
                               Three Months Ended            Six Months Ended
                                 June 30,                         June 30,
                           Increase           Increase
                1997  1996(Decrease)      1997         1996        (Decrease)
 ---------   ---------   ------------   ----------   ----------   ------------
<S>            <C>         <C>     <C>       <C>       <C>    <C> 
 Interest income 9.11 $    7.97   $  1.14    $    17.45   $    15.64   $  1.81
Interest expense 3.99      3.05      0.94       7.32         6.02          1.30
   ---------   ---------   ------------   ----------   ----------   -----------
 Net interest income 5.12  4.92      0.20     10.13         9.62          0.51
Provision for
 loan losses          .07  0.00      0.07      0.07         0.00          0.07
  ---------   ---------   ------------   ----------   ----------   -----------
  Net interest income after
  provision for
 loan losses        5.05   4.92      0.13     10.06         9.62          0.44
    ---------   ---------   ------------   ----------   ----------   -----------
Non-interest
 income             0.54   0.58     (0.04)     1.05         1.07         (0.02)
Non-interest
 expense            4.08   3.96      0.12      8.31         7.75          0.56
   ---------   ---------   ------------   ----------   ----------   -----------
 Income before
 income taxes       1.51   1.54     (0.03)      2.80         2.94         (0.14)
 tax expense        0.53   0.430     0.10       0.97         0.85          0.12
  ---------   ---------   ------------   ----------   ----------   -----------
 Net income   $    0.98   $ 1.11   $ (0.13)   $ 1.83   $     2.09   $     (0.26)
=========   =========   ============   ==========   ==========   ============

</TABLE>

The Company's  annualized  return on average assets (ROA) for the second quarter
of 1997 was  0.87%  compared  to 1.10%  for the  second  quarter  of 1996.  This
compares  with ROA of 0.82% and 1.04% for the six month  periods  ended June 30,
1997 and 1996,  respectively.  Annualized return on average shareholders' equity
(ROE) was 8.33% for the second  quarter of 1997 compared to 10.00% in the second
quarter of 1996, while  year-to-date ROE was 7.80% and 9.42% as of June 30, 1997
and 1996, respectively.


NET INTEREST INCOME
The most  significant  component of The  Company's  net earnings is net interest
income,  which represents the excess of interest income earned on earning assets
over the  interest  expense paid for sources of funds.  Net  interest  income is
affected  by changes in volume  resulting  from  growth  and  alteration  of the
balance sheet's composition, as well as by fluctuations in market interest rates
and maturities of sources and uses of funds.

For purposes of this  discussion,  net  interest  income is presented on a fully
tax-equivalent  basis  to  enhance  the  comparability  of  the  performance  of
tax-exempt to fully taxable earning assets.  For the periods ended June 30, 1997
and 1996, the tax-equivalent adjustment was $52,000 and $54,000, respectively.

The  Company's  net  interest  income on a fully  tax-equivalent  basis  totaled
$2,002,000 for the six month period

                                                           12

<PAGE>



ended  June  30,  1997  compared  to  $1,906,000  for the same  period  of 1996,
representing  an increase of $97,000 or 5.1%.  For the  quarters  ended June 30,
1997 and 1996,  net  interest  income on a fully  tax-equivalent  basis  totaled
$1,011,000  and  $973,000,  respectively.  The  Company's  net yield on interest
earning  assets  decreased to 4.92% in 1997 from 5.17% in 1996.  The decrease in
the net  yield  on  earning  assets  is due to a higher  cost of  rate-sensitive
liabilities.  The cost of interest bearing liabilities increased to 4.11% versus
the previous year's 3.93%, and was primarily due to increased rates paid on time
and savings deposits,  and the additional  interest expense  associated with the
Bank's  Federal Home Loan Bank  borrowings.  Further  analysis of The  Company's
yields on interest earning assets and interest  earning  liabilities and changes
in its net interest income are presented in TABLE I and TABLE II.




                                                           13

<PAGE>


<TABLE>
<CAPTION>
                                                         TABLE I
                                                AVERAGE BALANCE SHEET AND
                                              NET INTEREST INCOME ANALYSIS
                                                (In thousands of dollars)

                     Six Months Ended                      Six Months Ended
                        June 30, 1997                         June 30, 1996
 -----------------------------------------------------------------------------
         Average                   Yield/      Average                   Yield/
        Balance    Interest(1)     Rate       Balance    Interest(1)     Rate
<S>  <C>          <C>            <C>       <C>          <C>           <C>       
INTEREST EARNING ASSETS

 Loans$   59,751   $    2,756       9.22%   $   46,388   $    2,260       9.74%

 Securities:
 Taxable  16,280          470        5.77       19,445          556        5.72
Tax-exempt 4,151          152        7.30        4,517          161        7.13
     ----------   ----------   ---------   ----------   ----------   ---------
Total
securities20,431          622        6.08       23,962          717        5.98
     ----------   ----------   ---------   ----------   ----------   ---------

 Federal
 funds sold 1,299           34        5.23        3,352           88        5.25
          ------   ----------   ---------   ----------   ----------   ---------

 Total interest earning
 assets    81,481        3,412        8.37       73,702        3,065        8.32
    ----------   ----------   ---------   ----------   ----------   ---------

NON-INTEREST EARNING ASSETS
Cash and due from banks              2,360                                 2,223
Bank premises
 andequipment  2,074                                 1,188
 Other assets               1,108                                 1,156
 Allowance for loan losses         (647)                                  (609
                            ----------                            ----------


Total assets                   $   86,376                            $   77,660
                             ==========                            ==========

INTEREST BEARING LIABILITIES
Demand deposits $   12,924   $  171     2.65   $   13,014   $   173    2.66
Savings deposits    21,601      408     3.78       19,958       349    3.50
Time deposits      28,614       720     5.03       26,033       636    4.89
     ----------   ----------   ---------   ----------   ----------   ---------
 Total Interest-
bearing deposits    63,139    1,299     4.11       59,005     1,158     3.93

Repurchase
 Agreements            733       14     3.82           45         1        4.44
Federal Funds
 Purchased             254        5     3.94            0         0        0.00
Long-term FHLB
 borrowings           2680       91     6.79            0         0        0.00
    ----------   ----------   ---------   ----------   ----------   ---------
 Total other
 interest bearing
 liabilities         3,667      110     6.42           45         1        4.44

Total Interest
 bearing liabilities  66,806   1,409    4.22       59,050     1,159        3.93

NON-INTEREST BEARING LIABILITIES
     AND SHAREHOLDERS' EQUITY
    Demand deposits                    $    9,575                        8,984
    Other liabilities                         968                     1,069
    Shareholders' equity                    9,027                       8,557
                             ----------                            ----------

    Total liabilities and
    shareholders' equity       $   86,376                            $   77,660
                             ==========                            ==========

    NET INTEREST
    EARNINGS                 $    2,003                            $    1,906
                              ==========                            ==========

NET YIELD ON INTEREST EARNING
 ASSETS                            4.92%                                 5.17%
                             =========                             =========

</TABLE>
(1) - Calculated on a fully  tax-equivalent basis using the rate of 34% for 1997
and 1996.

                                                           14

<PAGE>




                                    TABLE II
                     CHANGES IN INTEREST INCOME AND EXPENSE
               DUE TO CHANGES IN AVERAGE VOLUME AND INTEREST RATES
                            (In thousands of dollars)


                                                    Six Months Ended
                                           June 30, 1997 vs. June 30, 1996
                                           Increase (Decrease)
                                            Due to Changes in:
                                            Volume(1)  Rate(1)   Total
INTEREST EARNING ASSETS
     Loans .................................   $ 622    $(126)   $ 496

     Securities:
          Taxable ..........................     (91)       5      (86)
          Tax-exempt (2) ...................     (14)       4      (10)
                                               -----    -----    -----
              Total securities .............    (105)       9      (96)
                                               -----    -----    -----

     Federal funds sold ....................     (55)       1      (54)
                                               -----    -----    -----

          Total interest earning assets ....     462     (116)     346
                                               -----    -----    -----

INTEREST BEARING LIABILITIES
     Demand deposits .......................      (1)      (1)      (2)
     Savings deposits ......................      30       29       59
     Time deposits .........................      65       19       84
     Repurchase agreements .................      13        0       13
     Federal funds purchased ...............       5        0        5
     Long-term FHLB borrowings .............      91        0       91
                                               -----    -----    -----

          Total interest bearing liabilities     203       47      250
                                               -----    -----    -----

              NET INTEREST EARNINGS ........   $ 259    $(163)   $  96
                                               =====    =====    =====


(1) - The change in  interest  due to both rate and  volume  has been  allocated
between the factors in proportion  to the  relationship  of the absolute  dollar
amounts of the change in each.

(2) - Calculated on a fully tax-equivalent basis using the rate of 34%.



                                                           15

<PAGE>



PROVISION FOR LOAN LOSSES
The  provision  for loan  losses  represents  charges to earnings  necessary  to
maintain an adequate  allowance for potential  future loan losses.  Management's
determination  of the appropriate  level of the allowance is based on an ongoing
analysis of credit quality and loss potential in the loan portfolio, actual loan
loss experience  relative to the size and characteristics of the loan portfolio,
change in the composition and risk characteristics of the loan portfolio and the
anticipated influence of national and local economic conditions. The adequacy of
the allowance for loan losses is reviewed  quarterly and adjustments are made as
considered necessary.

During the second  quarter of 1997,  the Bank made a $13,000  provision for loan
losses.  Prior to the second  quarter of 1997,  no provision had been made since
1994 due to the general  strengthening of the Bank's underwriting  standards and
loan loss  experience.  The provision for loan losses was initiated again during
the second quarter of 1997 due to the strong growth in the loan  portfolio.  For
additional  discussion  of the  Allowance,  refer  to the Loan  section  of this
discussion.

NON-INTEREST INCOME
Non-interest income includes revenues for all sources other than interest income
and yield  related  loan fees.  For the six month  period  ended June 30,  1997,
non-interest  income totaled $203,000,  representing a slight decrease of $3,000
from the $206,000  recorded  during the same period of 1996.  As a percentage of
average  assets,  non-interest  income  was  0.47%  and  0.53% for the six month
periods ended June 30, 1997 and 1996, respectively. Service fees increased 38.8%
to  $136,000  from  $98,000  as a result of the  Bank's  concentrated  effort to
increase  fee income on deposits  and related  products.  However,  trust income
decreased to only $12,000  from 1996's  level of $40,000.  This  decrease is due
primarily to the loss of non-recurring trust income that was realized during the
first half 1996. While the Company seeks to attract new trust business,  estates
and other trust  services tend to fluctuate,  and trust revenues are expected to
remain behind 1996 levels for the remainder of the year.

On a quarter-to-quarter basis, non-interest income decreased to $103,000 for the
second  quarter of 1997  compared  to $112,000  for the second  quarter of 1996.
Service  fees  increased  $5,000 to $65,000,  while trust income was only $5,000
compared to $19,000 for the second quarter of 1996.

NON-INTEREST EXPENSE
Non-interest  expense comprises overhead costs which are not related to interest
expense  or to  losses  from  loans  or  securities.  As of June 30,  1997,  the
Company's  non-interest expense totaled $1,601,000,  representing an increase of
$109,000,  or 6.8%, over total non-interest  expense incurred for the six months
ended June 30,  1996.  However,  expressed as a  percentage  of average  assets,
non-interest  expense actually decreased to 3.71% at June 30, 1997, versus 3.84%
at June 30, 1996.

Salaries and employee  benefits are the  Company's  largest  non-interest  cost,
representing approximately 53% and 51% of total non-interest expense at June 30,
1997 and 1996, respectively.  Salaries and employee benefits increased $101,000,
or  13.4% as of June 30,  1997  compared  to June 30,  1996.  This  increase  is
primarily  due to the  addition  of four new  employees  for the  Company's  new
Charleston  branch  location  which  were not  included  in  1996's  first  half
operating results,  as well as normal merit increases for certain members of the
existing staff.

Net  occupancy  expense  increased  25.3%,  or  $24,000 to  $119,000  due to the
additional  expenses  associated with both the new Charleston branch and the new
Lewisburg facility. Likewise,  equipment,  rentals, depreciation and maintenance
expenditures increased 23.9%, or $27,000 to $140,000 due to the additional fixed
assets associated with the two new locations. Other operating expenses decreased
to $464,000,  or 12.2%, as of June 30, 1997, from $529,000 for the first half of
1996 as a result  of the  Company's  deliberate  efforts  to  reduce  fixed  and
variable non-interest expenses.

On a quarter-to-quarter basis, other non-interest expense increased to $785,000,
or 2.9%, for the second quarter of 1997 from $763,000  during the second quarter
of 1996. Salaries and employee benefits increased to $430,000,  or 9.1%, for the
second  quarter of 1997 from $394,000 for the same period of 1996. Net occupancy
expense  increased  to $78,000,  or 62.5%,  for the second  quarter of 1997 from
$46,000 for the second quarter of 1996. Other operating expenses decreased 23.3%
from  $266,000  in the  second  quarter  of 1996 to  $204,000  during the second
quarter of 1997.  These  quarter-to-quarter  changes are due to the same reasons
discussed above.

INCOME TAXES
The Company's  income tax expense,  which includes both Federal and State income
taxes, totaled $188,000 for the six month period ended June 30, 1997, reflecting
a $25,000 increase when compared to the same period of 1996.  Income tax expense
equaled  34.8%  and  28.8% of  income  before  taxes at June 30,  1997 and 1996,
respectively.  For  financial  reporting  purposes,  income tax expense does not
equal the Federal statutory income

                                                           16

<PAGE>



tax rate of 34.0% when  applied to pre-tax  income,  primarily  because of State
income taxes and  tax-exempt  interest  income  included in income before income
taxes.

FINANCIAL CONDITION
The  Company's  total  assets were  $90,966,000  at June 30,  1997,  compared to
$83,668,000 at December 31, 1996,  representing a 8.7% increase,  primarily as a
result of its expansion into the Charleston,  WV, market. This growth was funded
through increases in deposits and long-term Federal Home Loan Bank borrowings as
further discussed below.

Securities
The Bank's total  securities  portfolio  decreased by  $3,749,000  or 16.6% from
December  31,  1996.  This  decrease  is a result  of normal  maturities  in the
Company's  securities  portfolio  and the  corresponding  shift  of  funds  into
higher-yielding  loan products.  A summary of the Company's securities portfolio
(both  held-to-maturity  and  available-  for-sale) is included as Note 2 to the
condensed consolidated financial statements.

Loans
Loans,  net of unearned  income,  increased by  $10,772,000  or 20.2% during the
first half of 1997.  A summary of the Bank's  loans by  category  is included as
Note 3 to the condensed  consolidated  financial statements.  This increase is a
result  of the  Bank's  concentrated  effort  to grow  its loan  portfolio,  and
management  believes that loan growth will continue throughout 1997, although at
a slower rate. The majority of this growth has been in  high-quality  commercial
and commercial real estate loans. Refer to Note 3 to the Condensed  Consolidated
Financial Statements for a detailed breakdown of loans by type at June 30, 1997,
compared with December 31, 1996.

The allowance for loan losses is maintained at a level considered to be adequate
to provide for losses  that can be  reasonably  anticipated.  The  allowance  is
increased  by  provisions  charged  to  operating  expense  and  reduced  by net
charge-offs.  The  Company's  management,  on  a  quarterly  basis,  performs  a
comprehensive  loan  evaluation  which  encompasses  the  identification  of all
potential problem credits, which are included on an internally generated "watch"
list.  The  allowance  for loan losses was $643,000 at June 30, 1997 compared to
$654,000  at December  31,  1996.  Expressed  as a  percentage  of loans (net of
unearned  income),  the  allowance  for loan  losses was 1.00% at June 30,  1997
compared to 1.22% at December 31, 1996. Loans charged-off,  net of recoveries of
previously  charged-off loans, totaled $24,000 and $52,000 for the periods ended
June 30, 1997 and 1996,  respectively.  See Note 4 of the notes to the condensed
consolidated  financial  statements  for  an  analysis  of the  activity  in the
Company's  allowance  for loan losses for the six month  periods  ended June 30,
1997 and 1996.  Management  believes that the current allowance is sufficient to
cover any potential losses in the current portfolio.

A summary of the Company's past due loans and non-performing  assets is provided
in the following table.

               SUMMARY OF PAST DUE LOANS AND NON-PERFORMING ASSETS
                            (in thousands of dollars)

                                      June 30,    December 31,
                                   1997     1996     1996
                                -------   ------   ------
Loans past due 90 or more days
     still accruing interest .   $    0   $    0   $    0
                                 ======   ======   ======

Non-performing assets:
     Non-accruing loans ......   $1,174   $  262   $  161
     Other real estate owned .       22       24       22
                                 ------   ------   ------
                                 $1,196   $  286   $  183
                                 ======   ======   ======


Non-accrual  loans  increased to  $1,196,000  as of June 30,  1997,  compared to
$286,000 at June 30, 1996. Included in the non-accrual totals above are impaired
loans  totalling  $1,119,000  and  $136,000  as  of  June  30,  1997  and  1996,
respectively.  The Company places into non-accrual  status those loans which the
full  collection of principal and interest are unlikely or which are past due 90
or more days,  unless the loans are  adequately  secured  and in the  process of
collection.  The increase in  non-accruing  loans is related to a single line of
credit  secured by accounts  receivable  that is in the  process of  collection.
Management  is still in the process of  evaluating  this credit,  however at the
present time it appears that the  unallocated  portion of the current  allowance
for loan losses is  sufficient  to cover any  possible  losses.  It is currently
anticipated  that  any  under-secured   balances  will  be  restructured  on  an
amortizing basis at a later date.


                                                           17

<PAGE>





Deposits
Total  deposits  increased  2.5%  to  $75,177,000  as of  June  30,  1997,  from
$73,316,000   at  December  31,  1996.   This   increase  was  centered  in  the
interest-bearing  deposit accounts,  primarily time deposits and certificates of
deposits.  This  increase  resulted  from  an  increase  in  interest  rates  on
certificates  of  deposit,  special  promotions,  and  other  local  competitive
conditions.


Long-term Borrowings
Due to increased loan demand, the Company obtained a $5,000,000,  3-year advance
from the  Federal  Home Loan Bank.  In  anticipation  of an increase in interest
rates on borrowed funds,  the Company's  subsidiary bank borrowed the funds from
the FHLB of Pittsburgh  at a fixed rate of interest to lock-in a funding  source
for its anticipated  loan growth.  For more information on this FHLB debt please
see Note 7 to the condensed consolidated financial statements.


LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
Liquidity  reflects the Company's ability to ensure the availability of adequate
funds to meet loan commitments and deposit  withdrawals,  as well as provide for
other Company  transactional  requirements.  Liquidity is provided  primarily by
funds invested in cash and due from banks and Federal funds sold,  which totaled
$5,323,000  at June 30,  1997  versus  $5,239,000  at  December  31,  1996.  The
Company's liquidity position is monitored continuously to ensure that day-to-day
as well as anticipated funding needs are met.

Further  enhancing the Company's  liquidity is the  availability  as of June 30,
1997 of $8,350,000 in securities maturing within one year. Also, the Company has
classified   additional   securities  with  an  estimated  fair  value  totaling
$2,479,000  as  available  for  sale  in  response  to an  unforeseen  need  for
liquidity.  Additionally,  the Company's  subsidiary bank has unused portions of
lines of credit available under existing borrowing arrangements.

Management is not aware of any trends, commitments, events or uncertainties that
have resulted in or are reasonably  likely to result in a material change to the
Company's liquidity position.

Interest rate risk  represents  the  volatility in earnings and market values of
interest earning assets and liabilities  resulting from changes in market rates.
The  Company  seeks to  minimize  interest  rate  risk  through  asset/liability
management.  The Company's principal asset/liability  management strategy is gap
management. Gap is the measure of the difference between the volume of repricing
interest  earning  assets and  interest  bearing  liabilities  during given time
periods. When the volume of repricing interest earning assets exceeds the volume
of repricing  interest bearing  liabilities,  the gap is positive -- a condition
which usually is favorable during a rising rate environment.  The opposite case,
a negative gap,  generally is favorable during a falling rate environment.  When
the interest rate sensitivity gap is near zero, the impact of interest rate risk
is  limited,  for at this point  changes  in net  interest  income  are  minimal
regardless of whether  interest rates are rising or falling.  An analysis of the
Company's current gap position is presented in TABLE III.

                                                           18

<PAGE>



<TABLE>
<CAPTION>
                                                        TABLE III
                                             INTEREST RATE SENSITIVITY GAPS
                                                      June 30, 1997
                                                (In thousands of dollars)

                                                           Repricing (1)
                                  0 to 3      3 to 6       6 to 12     After
                         Months      Months       Months    12 Months    Total
<S>                   <C>          <C>          <C>         <C>          <C> 
INTEREST EARNING ASSETS
Loans, net of unearned
 income             $    19,181  $    6,057   $   7,817   $  31,171    $  64,226
 Scurities               5,500       1,000       1,850      10,519       18,869
 Federal funds sold       2,465           0           0           0        2,465
              -----------  ----------   ---------   ---------    ---------
Total interest earning
 assets                   27,146       7,057       9,667   41,690       85,560
                -----------  ----------   ---------   ---------    ---------

INTEREST BEARING LIABILITIES
 Demand deposits        12,929           0           0           0       12,929
 Savings deposits       22,154           0           0           0       22,154
 Time deposits           7,132      10,172       6,247       6,985       30,536
 Repurchase agreements   881           0           0           0          881
  Long-term FHLB borrowings 0           0           0       5,000        5,000
                 -----------  ----------   ---------   ---------    ---------

 Total interest
 bearing liabilities  43,096      10,172       6,247      11,985       71,500
                -----------  ----------   ---------   ---------    ---------

 Contractual interest
 sensitivity gap     (15,950)     (3,115)       3,420      29,705       14,060

 Adjustment (2)          35,083    (35,083)           0           0            0
                 -----------  ----------   --------    ---------    ---------

 Adjusted interest
 sensitivity gap     $    19,133  $  (38,198)  $   3,420   $  29,705    $ 14,060
               ===========  ===========  =========   =========    ========

  Cumulative adjusted
 interest sensitivity gap$ 19,133  $  (19,065)  $ (15,645)  $  14,060
                        ===========  ===========  ==========  =========
  Cumulative adjusted
 gap ratio                      3.39        0.16        0.74        1.20
                            ===========  ==========   =========   =========

 Cumulative adjusted gap as a percentage
  of Total Earning Assets         22.36%    (22.28%)    (18.29%)      16.43%
                        ==========  ==========   =========   =========

</TABLE>
(1) - Repricing on a contractual basis unless otherwise noted.

(2) - Adjustment to approximate the actual  repricing of interest bearing demand
deposits and savings accounts based upon historical experience.


The  preceding  table  reflects  the  Bank's  cumulative  one year net  interest
sensitivity  position, or gap, as 0.74, or ($15,645,000.) Thus, the Bank is in a
negative  gap  position  within a one year time  frame.  This  indicates  that a
significant increase in interest rates within a short time frame during the next
12 months could have a  significant  negative  impact on the Bank's net interest
income.  However,  interest rates on the majority of the Bank's interest-bearing
deposits may be changed by  management  at any time based on their terms.  Since
management believes that repricing of interest bearing deposits in an increasing
interest rate  environment  will  generally lag behind the repricing of interest
bearing  assets,  the  Bank's  interest  rate  risk  within  one  year  is at an
acceptable level.

The  information  presented  in the table above  represents a static view of the
Bank's  gap  position  as of June  30,  1997,  and as such,  does  not  consider
variables such as future loan and deposit volumes, mixes and interest rates. The
Company seeks to maintain its adjusted interest sensitivity gap within 12 months
to a relatively small balance,  positive or negative,  regardless of anticipated
upward or down  movements in interest rates in an effort to limit the effects of
interest rate risk on Company net interest income.




                                                           19

<PAGE>




CAPITAL RESOURCES
Maintenance of a strong capital  position is a continuing  goal of the Company's
management.  Through management of its capital  resources,  the Company seeks to
provide an  attractive  financial  return to its  shareholders  while  retaining
sufficient capital to support future growth.

Total  shareholders'  equity  at  June  30,  1997  was  $9,035,000  compared  to
$8,841,000 at December 31, 1996,  representing an increase of $194,000, or 2.2%.
Total  shareholders'  equity expressed as a percentage of total assets decreased
from 10.6% at December 31, 1996 to 9.9% at June 30, 1997,  due to the  increased
asset level and increased dividend payout. Cash dividends totaling $154,000,  or
$0.80 per share were declared during the first half of 1997 versus  dividends of
$126,000, or $0.66 per share, during the first half of 1996. These payout levels
represented 44% and 31% of the company's year-to-date earnings for June 30, 1997
and 1996, respectively.


REGULATORY RESTRICTIONS ON CAPITAL AND DIVIDENDS
The primary source of funds for the dividends paid by First National  Bankshares
Corporation is dividends  received from its subsidiary  bank.  Dividends paid by
the subsidiary bank are subject to restrictions by banking regulations. The most
restrictive  provision  requires  approval by the regulatory agency if dividends
declared  in any year exceed the year's net  income,  as  defined,  plus the net
retained profits of the two preceding years.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the subsidiary bank to maintain  minimum amounts and ratios of total and
Tier I capital  (as  defined in the  regulations)  to  risk-weighted  assets (as
defined),  and of Tier  capital  (as  defined) to average  assets (as  defined).
Management  believes,  as of June 30, 1997,  that the subsidiary  bank meets all
capital adequacy  requirements to which it is subject.  As of June 30, 1997, the
subsidiary bank's Risk Based Capital Ratios are as follows:

                            RISK-BASED CAPITAL RATIOS
                                  June 30, 1997
                                                             Minimum
                                             Actual       Requirement

          Tier 1 risk-based capital ratio    14.75%           4.00%
          Total risk-based capital ratio     15.80%           8.00%
          Leverage ratio                     10.15%           3.00%

Improved  operating results and a consistent  dividend program,  coupled with an
effective  management  of credit and interest rate risk will be the key elements
towards the Company  continuing to maintain its present strong capital  position
in the future.





                                                           20

<PAGE>




PART II.  OTHER INFORMATION

     Item 1. Legal Proceedings
          Neither the Company nor its subsidiary  Bank is currently  involved in
          any  material  legal   proceedings,   other  than  routine  litigation
          incidental to their business.


     Item 2 - Changes in Securities
          None


     Item 3 - Defaults upon Senior Securities
          None


     Item. 4. Submission of Matters to a Vote of Security Holders
          No matters were submitted to stockholders during the second quarter of
1997.


     Item 5. Other Information
          None


     Item 6.  Exhibits and Reports on Form 8-K
          a)  All exhibits included with this filing follow the signature page.
              1.  Exhibit 11, Computation of Per Share Earnings, is
                  filed herewith.
              2.  Exhibit 27, Financial Data Schedule, is filed herewith.

          b). The Company did not file any Form 8-K, Current Reports
              during the quarter ended June 30, 1997.


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                                   SIGNATURES



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







                                  FIRST NATIONAL BANKSHARES CORPORATION



                                  By      /S/  L. Thomas Bulla
                                  ---------------------------------------------
                                  L. Thomas Bulla
                                  President and Chief Executive Officer




                                  By      /S/ Keith E. Morgan
                                  ---------------------------------------------
                                  Keith E. Morgan
                                  Secretary & Treasurer



                                  By      /S/ Jack D. Whitt
                                  ---------------------------------------------
                                  Jack D. Whitt
                                  Chief Financial Officer, First National Bank
                                  (Principal Financial and
                                  Accounting Officer)


Date:    08/13/97



                                                           22

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                                   EXHIBIT 11
                        COMPUTATION OF PER SHARE EARNINGS


Primary Earnings Per Share
     Primary  Earnings  per Share is  calculated  based upon the  Company's  net
     income after income taxes, divided by the weighted average number of shares
     outstanding during the fiscal period.

Fully Diluted Earnings Per Share
     Fully Diluted Earnings Per Share is calculated based upon the Company's net
     income after income taxes, divided by the weighted average number of shares
     outstanding   during  the  period  plus  all   exercisable   stock  options
     outstanding but not yet exercised at the end of the period.

     As of June 30,  1997,  the  Company  had 3,000  exercisable  stock  options
     outstanding. No options have yet been exercised.





                                                           23

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