SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
(Mark One)

  X      Annual Report under Section 13 or 15(d) of the Securities Exchange Act
-----    of 1934 For the fiscal year ended December 31, 2002

         or

         Transition Report under Section 13 or 15(d) of the Securities
-----    Exchange Act of 1934
               For the transition period from          to
                                              --------    --------
                          Commission file no. 000-22505

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

      South Carolina                                         57-1033165
  -----------------------                                  --------------
(State or Other Jurisdiction                             (I.R.S. Employer
of Incorporation or Organization)                        Identification No.)

        217 North Granard Street
        Gaffney, South Carolina                             29341
     ---------------------------------------              ---------
     (Address of Principal Executive Offices)             (Zip Code)


                                 (864) 488-2265
                                 --------------
                 Issuer's Telephone Number, Including Area Code

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

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

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for past 90 days. Yes X  No
                                                                  ---   ---
         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B in this form, and no disclosure will be contained, to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X ]

         The issuer's income for its most recent fiscal year was $532,247. As of
March 4, 2003, 647,123 shares of Common Stock were issued and outstanding.

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Company on March 4, 2003 was $4,979,807.  This  calculation is based upon
an estimate of the fair market value of the Common Stock by the Company's  Board
of Directors of $10.90 per share.  There is not an active trading market for the
Common  Stock and it is not possible to identify  precisely  the market value of
the Common Stock.

         Transitional Small Business Disclosure Format. (Check one): Yes   No X
                                                                        ---  ---

                       DOCUMENTS INCORPORATED BY REFERENCE

         The Company's Annual Report to Shareholders for the year ended December
31, 2002 is  incorporated  by  reference in this Form 10-KSB in Part II, Items 6
and 7. The Company's  Proxy  Statement for the Annual Meeting of Shareholders to
be held on April 22, 2003 is  incorporated  by  reference in this Form 10-KSB in
Part III, Items 9 through 12.






<PAGE>

Item 1.  Description of Business

         This Report contains "forward-looking  statements" relating to, without
limitation, future economic performance,  plans and objectives of management for
future  operations,  and  projections of revenues and other financial items that
are based on the  beliefs  of  management,  as well as  assumptions  made by and
information  currently  available  to  management.   The  words  "may,"  "will,"
"anticipate," "should," "would," "believe," "contemplate," "expect," "estimate,"
"continue,"  "may," and "intend," as well as other similar words and expressions
of the future, are intended to identify forward-looking  statements.  Our actual
results may differ materially from the results discussed in the  forward-looking
statements,  and our  operating  performance  each quarter is subject to various
risks and  uncertainties  that are  discussed  in detail in our filings with the
Securities and Exchange Commission, including, without limitation:

             o   the effects of future economic conditions;

             o   governmental   monetary  and  fiscal   policies,   as  well  as
                 legislative and regulatory changes;

             o   changes  in  interest  rates and their  effect on the level and
                 composition  of deposits,  loan demand,  and the values of loan
                 collateral,  securities and other interest-sensitive assets and
                 liabilities;

             o   the level of allowance for loan losses;

             o   the rate of delinquencies and amounts of charge-offs;

             o   the rates of loan growth;

             o   adverse   changes  in  asset  quality  and   resulting   credit
                 risk-related losses and expenses;

             o   our ability to control costs,  expenses,  and loan  delinquency
                 rates; and

             o   the  effects  of  competition  from  other  commercial   banks,
                 thrifts,  mortgage banking firms,  consumer finance  companies,
                 credit unions, securities brokerage firms, insurance companies,
                 money  market  and  other  mutual  funds  and  other  financial
                 institutions  operating  in  our  market  area  and  elsewhere,
                 including  institutions operating regionally,  nationally,  and
                 internationally,   together  with  such  competitors   offering
                 banking products and services by mail, telephone,  computer and
                 the Internet.

General

         FNB  Bancshares,  Inc. was  incorporated in South Carolina on September
27, 1995 for the purpose of  operating  as a bank  holding  company.  Our wholly
owned subsidiary,  First National Bank of the Carolinas,  commenced  business on
October 18, 1996 and is primarily  engaged in the business of accepting  savings
and demand deposits and providing  mortgage,  consumer,  and commercial loans to
the general public. Our bank has a main office in Gaffney and two branch offices
in Blacksburg, South Carolina and Gaffney, South Carolina. The bank is organized
as a national  banking  association  under the laws of the United  States,  with
deposits  insured  by the  FDIC.  The bank is a member  of the  Federal  Reserve
System.



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<PAGE>

Location and Service Area

         The bank engages in a general  commercial and retail banking  business,
emphasizing  the  needs  of  small-  to  medium-sized  businesses,  professional
concerns,  and  individuals,  primarily  in  Gaffney,  South  Carolina  and  the
surrounding area,  including Cherokee County. The principal executive offices of
both the company and the bank are located at 217 North Granard Street,  Gaffney,
South Carolina 29342. The address of the Blacksburg  office is 207 West Cherokee
Street,  Blacksburg,  South  Carolina  29702.  The address of the second Gaffney
office is 626 Chesnee  Highway,  Gaffney,  South Carolina  29341.  The company's
telephone number is (864) 488-2265. See "Item 2. Description of Property."

         Our primary service area is Cherokee County, South Carolina. Blacksburg
and  Gaffney  are  approximately  eight  miles  from each  other and are the two
largest  municipalities  in  Cherokee  County.  Cherokee  County  is  part  of a
five-county  metropolitan  statistical area covering the "upstate" area of South
Carolina,  including Greenville,  Spartanburg,  Pickens,  Cherokee,  and Laurens
Counties.  Cherokee County is located between the major metropolitan statistical
areas    of    Greenville-Spartanburg-Anderson    of    South    Carolina    and
Charlotte-Gastonia-Rock    Hill   of   North   Carolina.   The   counties   from
Greenville-Spartanburg-Anderson to Charlotte-Gastonia-Rock Hill and Cherokee and
Laurens make up an area that is known to many as the "I-85  Business  Belt." The
presence of I-85  enhances  the  economic  potential  of the area by linking the
seven counties to other major southeastern markets,  including the Charlotte and
Atlanta markets, which are easily accessible to this area by I-85.

         Cherokee   County's   economy  is   dominated  by   manufacturing   and
agriculture.  With over 60  manufacturing  plants,  including  the Nestle Frozen
Foods  Company,  Milliken  & Co. -  Magnolia  Finishing  Plant,  and the  Timken
Company,   Cherokee  County  enjoys  a  diversified   manufacturing   community.
Manufacturing companies employ approximately 50% of the county's workforce,  and
the textile mills products sector accounts for nearly 50% of this  manufacturing
employment.

Marketing Focus

         Most of the banks in the Cherokee County area are now local branches of
large regional banks. Although size gives the larger banks certain advantages in
competing for business from large corporations,  including higher lending limits
and the  ability to offer  services  in other  areas of South  Carolina  and the
Cherokee County area, management believes there has been a void in the community
banking  market  in the  Cherokee  County  area  and  believes  that the bank is
successfully  filling  this void.  As a result,  we  generally do not attempt to
compete for the banking relationships of large corporations,  but we concentrate
our efforts on small- to medium-sized businesses and on individuals.

Banking Services

         The bank  offers a full range of deposit  services  that are  typically
available in most banks and savings and loan  associations,  including  checking
accounts,  NOW accounts,  savings  accounts,  and other time deposits of various
types,  ranging from daily money market accounts to longer-term  certificates of
deposit.  The  transaction  accounts and time  certificates  are tailored to the
bank's  principal  market  area at rates  competitive  to those  offered  in the
Cherokee County area. In addition, we offer certain retirement account services,
such as  Individual  Retirement  Accounts  (IRAs) and,  through  Raymond  James,
brokerage  services.  All  deposit  accounts  are  insured by the FDIC up to the
maximum amount  allowed by law  (generally,  $100,000 per depositor,  subject to
aggregation   rules).   The  bank  solicits  these  accounts  from  individuals,
businesses, associations and organizations, and governmental authorities.



                                       3
<PAGE>

Lending Activities

         General.  The bank  emphasizes a range of lending  services,  including
real  estate,  commercial  and  consumer  loans,  to  individuals  and small- to
medium-sized businesses and professional concerns that are located in or conduct
a substantial portion of their business in the bank's market area.

         Real Estate  Loans.  One of the primary  components  of the bank's loan
portfolio is loans  secured by first or second  mortgages on real estate.  These
loans  generally  consist of  commercial  real estate  loans,  construction  and
development  loans,  and residential  real estate loans (but exclude home equity
loans, which are classified as consumer loans). Loan terms generally are limited
to  five  years  or  less,  although  payments  may be  structured  on a  longer
amortization basis.  Interest rates are fixed or adjustable.  The bank generally
charges an  origination  fee.  Management  attempts to reduce credit risk in the
commercial real estate portfolio by emphasizing loans on  owner-occupied  office
and retail buildings where the loan-to-value  ratio,  established by independent
appraisals,  does not exceed  80%.  In  addition,  the bank  typically  requires
personal guarantees of the principal owners of the property backed with a review
by the bank of the personal  financial  statements of the principal owners.  The
principal  economic risk associated with each category of loans,  including real
estate  loans,  is the  creditworthiness  of the  bank's  borrowers.  The  risks
associated  with real estate loans vary with many  economic  factors,  including
employment  levels  and  fluctuations  in the  value  of real  estate.  The bank
competes for real estate loans with a number of bank competitors  which are well
established  in the  Cherokee  County  area.  Most  of  these  competitors  have
substantially  greater  resources and lending limits than the bank. As a result,
the bank  occasionally  must charge a lower interest rate to attract  borrowers.
See "--Competition".  The bank also originates loans for sale into the secondary
market.  The bank attempts to limit  interest rate risk and credit risk on these
loans by locking the interest rate for each loan with the secondary investor and
receiving the investor's underwriting approval prior to originating the loan.

         Commercial  Loans.  The bank makes  loans for  commercial  purposes  in
various lines of businesses.  Equipment  loans  typically are made for a term of
five years or less at fixed or  variable  rates,  with the loan fully  amortized
over the term and secured by the  financed  equipment  and with a  loan-to-value
ratio of 80% or less.  Working  capital loans typically have terms not exceeding
one year and are usually secured by accounts receivable,  inventory, or personal
guarantees  of the  principals  of the  business.  For loans secured by accounts
receivable or inventory,  principal is typically  repaid as the assets  securing
the loan are converted into cash, and in other cases  principal is typically due
at maturity. The principal economic risk associated with each category of loans,
including commercial loans, is the creditworthiness of the bank's borrowers. The
risks  associated  with  commercial  loans  vary  with  many  economic  factors,
including  the  economy in the  Cherokee  County  area,  especially  the tourist
economy.  The  well-established  banks in the  Cherokee  County  area  will make
proportionately  more loans to medium- to large-sized  businesses than the bank.
Many  of the  bank's  commercial  loans  are  made  to  small-  to  medium-sized
businesses  which  may be less  able to  withstand  competitive,  economic,  and
financial conditions than larger borrowers.

         Consumer  Loans.  The bank makes a variety of loans to individuals  for
personal and household purposes, including secured and unsecured installment and
term loans, home equity loans and lines of credit, and revolving lines of credit
such as credit cards.  These loans typically carry balances of less than $25,000
and,  in the case of  non-revolving  loans,  are  amortized  over a  period  not
exceeding 48 months. The revolving loans typically bear interest at a fixed rate
and require monthly payments of interest and a portion of the principal balance.
The underwriting criteria for home equity loans and lines of credit is generally
the same as applied by the bank when making a first  mortgage loan, as described
above,  and home equity lines of credit  typically  expire fifteen years or less
after origination. As with the other categories of loans, the principal economic
risk associated with consumer loans is the creditworthiness of our


                                       4
<PAGE>

borrowers,  and the principal competitors for consumer loans are the established
banks in the Cherokee County area.

         Loan Approval and Review. The bank's loan approval policies provide for
various levels of officer lending authority.  When the amount of aggregate loans
to a single borrower exceeds an individual officer's lending authority, the loan
request is considered and approved by an officer with a higher lending limit. We
have  established a management loan committee that must approve to its limit any
loan over the President's  lending limit. The bank's loan committee approves any
loan over the management loan committee  authority.  We do not make any loans to
directors, officers, or employees of the bank unless the loan is approved by our
board of directors  and is made on terms not more  favorable to such person than
would be available to a person not affiliated with us (excluding  consumer loans
less than $20,000 which are available at employee rates).

         Lending Limits.  The bank's lending activities are subject to a variety
of lending  limits  imposed by federal  law.  While  differing  limits  apply in
certain  circumstances  based on the type of loan or the nature of the  borrower
(including  the borrower's  relationship  to us), in general we are subject to a
loan-to-one-borrower  limit.  This limit will increase or decrease as the bank's
capital increases or decreases. Unless we are able to sell participations in our
loans to other  financial  institutions,  we will not be able to meet all of the
lending needs of loan customers requiring  aggregate  extensions of credit above
these limits.

Other Banking Services

         Other bank  services  include cash  management  services,  safe deposit
boxes,  travelers checks,  direct deposit of payroll and social security checks,
brokerage services, telephone banking and automatic drafts for various accounts.
The bank is associated  with a shared network of automated  teller machines that
may be used by our customers  throughout  South Carolina and other  regions.  We
also offer MasterCard and VISA credit card services through a correspondent bank
as an agent for the bank.

Competition

         The banking  business  is highly  competitive.  The bank  competes as a
financial   intermediary   with  other  commercial   banks,   savings  and  loan
associations,  credit  unions,  and money market  mutual funds  operating in the
Cherokee  County area and  elsewhere.  As of December 31, 2002,  there were four
commercial  banks  (none of which are  headquartered  in Cherokee  County),  one
savings bank,  and one credit union  operating in Cherokee  County.  A number of
these competitors are well established in the Cherokee County area. Most of them
have substantially  greater resources and lending limits than our bank and offer
certain  services,  such as extensive and established  branch networks and trust
services,  that we either do not expect to provide or do not currently  provide.
As a result of these competitive  factors, the bank may have to pay higher rates
of interest to attract deposits.

Employees

         We have 28 full-time employees as of December 31, 2002.


                           SUPERVISION AND REGULATION

         We are  subject  to  extensive  state  and  federal  banking  laws  and
regulations  which impose specific  requirements or restrictions on, and provide
for general  regulatory  oversight of,  virtually all aspects of our operations.
These laws and regulations  are generally  intended to protect  depositors,  not




                                       5
<PAGE>

shareholders.  The following  summary is qualified by reference to the statutory
and regulatory provisions  discussed.  Changes in applicable laws or regulations
may have a material effect on our business and prospects.  Our operations may be
affected  by  legislative   changes  and  the  policies  of  various  regulatory
authorities.  We cannot  predict the effect  that  fiscal or monetary  policies,
economic  control,  or new federal or state legislation may have on our business
and earnings in the future.

USA Patriot Act of 2001

         In October 2001, the USA Patriot Act of 2001 was enacted in response to
the  terrorist  attacks in New York,  Pennsylvania  and  Washington  D.C.  which
occurred on September 11, 2001.  The Patriot Act is intended to strengthen  U.S.
law enforcement's and the intelligence communities' abilities to work cohesively
to combat terrorism on a variety of fronts.  The potential impact of the Patriot
Act on financial  institutions of all kinds is significant and wide ranging. The
Patriot Act contains sweeping anti-money  laundering and financial  transparency
laws and imposes various  regulations,  including standards for verifying client
identification  at  account  opening,  and rules to  promote  cooperation  among
financial  institutions,  regulators and law enforcement entities in identifying
parties that may be involved in terrorism or money laundering.

FNB Bancshares, Inc.

         Because our holding company, FNB Bancshares, Inc., owns the outstanding
capital stock of our bank, our holding  company is a bank holding  company under
the federal Bank Holding Company Act of 1956 and the South Carolina  Banking and
Branching Efficiency Act.

         The Bank Holding  Company Act. Under the Bank Holding  Company Act, our
holding  company is subject to periodic  examination by the Federal  Reserve and
required  to  file  periodic  reports  of  its  operations  and  any  additional
information that the Federal Reserve may require.  Our activities at the holding
company level are limited to:

             o   banking and managing or controlling banks;
             o   furnishing   services  to  or   performing   services  for  our
                 subsidiaries; and
             o   engaging  in  other   activities   that  the  Federal   Reserve
                 determines to be so closely related to banking
             o   and managing or  controlling  banks as to be a proper  incident
                 thereto.

         Investments,  Control, and Activities. With certain limited exceptions,
the Bank Holding  Company Act requires every bank holding  company to obtain the
prior approval of the Federal Reserve before:

             o   acquiring substantially all the assets of any bank;
             o   acquiring direct or indirect ownership or control of any voting
                 shares  of any bank if after  the  acquisition  it would own or
                 control more than 5% of the voting  shares of such bank (unless
                 it already owns or controls the majority of such shares); or
             o   merging or consolidating with another bank holding company.

         In  addition,  and  subject to  certain  exceptions,  the Bank  Holding
Company Act and the Change in Bank Control Act require Federal Reserve  approval
prior to any person or company  acquiring  "control" of a bank holding  company.
Control is conclusively  presumed to exist if an individual or company  acquires
25% or more of any class of voting securities of a bank holding company. Control
is




                                       6
<PAGE>

rebuttably  presumed  to exist if  a  person acquires 10% or more, but less than
25%, of any class of voting  securities  and either the  company has  registered
securities  under Section 12 of the Securities  Exchange Act of 1934 or no other
person owns a greater percentage of that class of voting securities  immediately
after the  transaction.  Our common  stock is  registered  under the  Securities
Exchange Act of 1934. The  regulations  provide a procedure for challenge of the
rebuttable control presumption.

         Under the Bank Holding Company Act, a bank holding company is generally
prohibited  from  engaging in, or acquiring  direct or indirect  control of more
than 5% of the voting shares of any company  engaged in,  nonbanking  activities
unless the Federal  Reserve  Board has found those  activities  to be so closely
related to banking or managing or controlling  banks as to be a proper  incident
thereto. Some of the activities that the Federal Reserve Board has determined by
regulation  to be proper  incidents to the  business of a bank  holding  company
include:

             o   making or servicing loans and certain types of leases;
             o   engaging   in  certain   insurance   and   discount   brokerage
                 activities;
             o   performing certain data processing services;
             o   acting in certain circumstances as a fiduciary or investment or
                 financial adviser;
             o   owning savings associations; and
             o   making investments in certain corporations or projects designed
                 primarily to promote community welfare.

         The Federal Reserve Board imposes  certain capital  requirements on our
holding company under the Bank Holding Company Act, including a minimum leverage
ratio and a minimum ratio of "qualifying" capital to risk-weighted assets. These
requirements are described below under "Capital Regulations." Subject to capital
requirements  and certain  other  restrictions,  our holding  company is able to
borrow money to make a capital  contribution to our bank, and these loans may be
repaid  from  dividends  paid from our bank to our  company.  Our ability to pay
dividends is subject to  regulatory  restrictions  as described  below in "First
National Bank of the Carolinas - Dividends." Our holding company is also able to
raise capital for contribution to our bank by issuing  securities without having
to receive  regulatory  approval,  subject to compliance  with federal and state
securities laws.

         Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board  policy,  our holding  company is expected to act as a source of financial
strength  to  our  bank  and  to  commit   resources  to  support  our  bank  in
circumstances  in which our holding company might not otherwise do so. Under the
Bank Holding  Company Act, the Federal  Reserve Board may require a bank holding
company to terminate any activity or relinquish control of a nonbank subsidiary,
other than a nonbank  subsidiary  of a bank,  upon the Federal  Reserve  Board's
determination  that such  activity or control  constitutes a serious risk to the
financial soundness or stability of any subsidiary depository institution of the
bank's  holding  company.  Further,  federal bank  regulatory  authorities  have
additional  discretion to require a bank holding company to divest itself of any
bank or nonbank subsidiary if the agency determines that divestiture may aid the
depository institution's financial condition.

         South  Carolina  State  Regulation.  As a South  Carolina  bank holding
company under the South Carolina  Banking and Branching  Efficiency  Act, we are
subject to limitations on sale or merger and to regulation by the South Carolina
Board of  Financial  Institutions.  Prior to  acquiring  the capital  stock of a
national  bank, we are not required to obtain the approval of the Board,  but we
must notify them at least 15 days prior to doing so. We must receive the Board's
approval  prior  to  engaging  in the  acquisition  of a  South  Carolina  state
chartered bank or another South Carolina bank holding company.




                                       7
<PAGE>

First National Bank of the Carolinas

         Our bank, First National Bank of the Carolinas,  operates as a national
banking association incorporated under the laws of the United States and subject
to examination by the Office of the Comptroller of the Currency. Deposits in the
bank are insured by the FDIC up to a maximum amount, which is generally $100,000
per depositor subject to aggregation rules.

         The Office of the  Comptroller of the Currency and the FDIC regulate or
monitor virtually all areas of our bank's operations, including:

             o   security devices and procedures;
             o   adequacy of capitalization and loss reserves;
             o   loans;
             o   investments;
             o   borrowings;
             o   deposits;
             o   mergers;
             o   issuances of securities;
             o   payment of dividends;
             o   interest rates payable on deposits;
             o   interest rates or fees chargeable on loans;
             o   establishment of branches;
             o   corporate reorganizations;
             o   maintenance of books and records; and
             o   adequacy of staff training to carry on safe lending and deposit
                 gathering practices.

         The  Office  of the  Comptroller  of the  Currency  requires  banks  to
maintain  specified  capital ratios and imposes  limitations on banks' aggregate
investment in real estate, bank premises, and furniture and fixtures. The Office
of the  Comptroller  of the Currency  also requires  banks to prepare  quarterly
reports  on their  financial  condition  and to conduct  annual  audits of their
financial affairs in compliance with its minimum standards and procedures.

         Under the FDIC Improvement Act, all insured  institutions  must undergo
regular on-site  examinations by their appropriate  banking agency.  The cost of
examinations  of  insured  depository  institutions  and any  affiliates  may be
assessed by the appropriate  agency against each  institution or affiliate as it
deems  necessary or  appropriate.  Insured  institutions  are required to submit
annual reports to the FDIC,  their federal  regulatory  agency,  and their state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository  institutions to provide supplemental disclosure
of the  estimated  fair market  value of assets and  liabilities,  to the extent
feasible and practicable,  in any balance sheet, financial statement,  report of
condition or any other report of any insured  depository  institution.  The FDIC
Improvement  Act also  requires  the  federal  banking  regulatory  agencies  to
prescribe, by regulation,  standards for all insured depository institutions and
depository  institution holding companies  relating,  among other things, to the
following:

             o   internal controls;
             o   information systems and audit systems;
             o   loan documentation;


                                       8
<PAGE>

             o   credit underwriting;
             o   interest rate risk exposure; and
             o   asset quality.

         National banks and their holding companies which have been chartered or
registered  or have  undergone a change in control  within the past two years or
which have been deemed by the Office of the  Comptroller  of the Currency or the
Federal  Reserve Board to be troubled  institutions  must give the Office of the
Comptroller  of the Currency or the Federal  Reserve Board 30 days' prior notice
of the appointment of any senior  executive  officer or director.  Within the 30
day period, the Office of the Comptroller of the Currency or the Federal Reserve
Board, as the case may be, may approve or disapprove any such appointment.

         Deposit Insurance.  The FDIC has adopted a risk-based assessment system
for determining an insured depository  institutions'  insurance assessment rate.
This system takes into account the risks  attributable  to different  categories
and concentrations of assets and liabilities.  An institution is placed into one
of three capital categories:  (1) well capitalized;  (2) adequately capitalized;
or (3)  undercapitalized.  The FDIC also assigns an  institution to one of three
supervisory  subgroups,  based on the FDIC's  determination of the institution's
financial  condition  and  the  risk  posed  to  the  deposit  insurance  funds.
Assessments  range  from 0 to 27 cents per $100 of  deposits,  depending  on the
institution's  capital group and  supervisory  subgroup.  In addition,  the FDIC
imposes assessments to help pay off the $780 million in annual interest payments
on the $8 billion  Financing  Corporation bonds issued in the late 1980s as part
of the government rescue of the thrift industry.

         The FDIC may  terminate  its insurance of deposits if it finds that the
institution  has  engaged in unsafe and  unsound  practices,  is in an unsafe or
unsound  condition to continue  operations,  or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.

         Transactions  With Affiliates and Insiders.  Our bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which places limits on the
amount of loans or extensions of credit to, or investments  in, or certain other
transactions  with,  affiliates  and on the amount of advances to third  parties
collateralized by the securities or obligations of affiliates.  The aggregate of
all covered  transactions is limited in amount, as to any one affiliate,  to 10%
of our bank's capital and surplus and, as to all affiliates combined,  to 20% of
the bank's capital and surplus. Furthermore, within the foregoing limitations as
to amount, each covered transaction must meet specified collateral requirements.
Compliance is also required with certain provisions designed to avoid the taking
of low quality assets.

         Our  bank is also  subject  to the  provisions  of  Section  23B of the
Federal  Reserve Act which,  among other things,  prohibits an institution  from
engaging in certain transactions with certain affiliates unless the transactions
are  on  terms  substantially  the  same,  or at  least  as  favorable  to  such
institution or its subsidiaries,  as those prevailing at the time for comparable
transactions  with  nonaffiliated  companies.  Our bank is  subject  to  certain
restrictions on extensions of credit to executive officers,  directors,  certain
principal shareholders,  and their related interests.  Such extensions of credit
(i) must be made on substantially the same terms,  including  interest rates and
collateral,  as those  prevailing at the time for comparable  transactions  with
third  parties and (ii) must not involve  more than the normal risk of repayment
or present other unfavorable features.

         The Federal  Reserve  Board has  recently  issued  Regulation  W, which
codifies prior regulations under Sections 23A and 23B of the Federal Reserve Act
and interpretative guidance with respect to


                                       9
<PAGE>

affiliate  transactions.  Regulation  W  incorporates  the  exemption  from  the
affiliate  transaction  rules but expands the exemption to cover the purchase of
any type of loan or extension of credit from an  affiliate.  In addition,  under
Regulation W:

             o   a bank and its  subsidiaries  may not  purchase  a  low-quality
                 asset from an affiliate;
             o   covered transactions and other specified transactions between a
                 bank or its  subsidiaries and an affiliate must be on terms and
                 conditions  that are  consistent  with safe and  sound  banking
                 practices; and
             o   with some  exceptions,  each loan or  extension  of credit by a
                 bank to an  affiliate  must be  secured  by  collateral  with a
                 market value  ranging from 100% to 130%,  depending on the type
                 of  collateral,  of the  amount  of the  loan or  extension  of
                 credit.

         Regulation  W  generally   excludes   all   non-bank  and   non-savings
association  subsidiaries  of banks from treatment as affiliates,  except to the
extent that the Federal  Reserve  Board decides to treat these  subsidiaries  as
affiliates.  Concurrently with the adoption of Regulation W, the Federal Reserve
Board has proposed a regulation  which would  further  limit the amount of loans
that could be purchased by a bank from an affiliate to not more than 100% of the
bank's  capital and surplus.  Comments on the proposed  rule were due by January
13, 2003.

         Dividends.  A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided  profits then on hand,  after  deducting
expenses,  including reserves for losses and bad debts. In addition,  a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus  equals its stated  capital,  unless there has been  transferred  to
surplus no less than  one-tenth of the bank's net profits of the  preceding  two
consecutive half-year periods (in the case of an annual dividend).  The approval
of the Office of the Comptroller of the Currency is required if the total of all
dividends  declared by a national bank in any calendar year exceeds the total of
its net profits for that year  combined  with its  retained  net profits for the
preceding two years, less any required transfers to surplus.

         Branching.  National  banks are  required by the  National  Bank Act to
adhere to branch office banking laws  applicable to state banks in the states in
which they are located.  Under  current  South  Carolina  law, the bank may open
branch offices  throughout  South Carolina with the prior approval of the Office
of the Comptroller of the Currency. In addition, with prior regulatory approval,
the bank will be able to acquire existing banking  operations in South Carolina.
Furthermore,   federal  legislation  permits  interstate  branching,   including
out-of-state  acquisitions by bank holding  companies,  interstate  branching by
banks if allowed by state law, and interstate  merging by banks.  South Carolina
law, with limited  exceptions,  currently  permits  branching across state lines
through interstate mergers.

         Community  Reinvestment  Act. The Community  Reinvestment  Act requires
that, in connection  with  examinations of financial  institutions  within their
respective  jurisdictions,  the Federal Reserve,  the FDIC, or the Office of the
Comptroller  of the  Currency  shall  evaluate  the  record  of  each  financial
institution  in meeting the credit needs of its local  community,  including low
and  moderate  income  neighborhoods.  These  factors  are  also  considered  in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose  additional  requirements
and  limitations  on our bank.  Under the  Gramm-Leach-Bliley  Act,  banks  with
aggregate  assets of not more than $250  million  will be subject to a Community
Reinvestment  Act examination  only once every 60 months if the bank receives an
outstanding rating,  once every 48 months if it receives a satisfactory  rating,
and as needed if the rating is less than satisfactory.  Additionally,  under




                                       10
<PAGE>

the Gramm-Leach-Bliley Act, banks are required to publicly disclose the terms of
various Community Reinvestment Act-related agreements.

         Other  Regulations.  Interest and other charges collected or contracted
for by the bank are  subject to state  usury laws and  federal  laws  concerning
interest  rates.  The bank's loan  operations  are also  subject to federal laws
applicable to credit transactions, such as:

             o   the federal  Truth-In-Lending  Act,  governing  disclosures  of
                 credit terms to consumer borrowers;
             o   the Home Mortgage  Disclosure Act of 1975,  requiring financial
                 institutions  to provide  information  to enable the public and
                 public officials to determine  whether a financial  institution
                 is fulfilling  its obligation to help meet the housing needs of
                 the community it serves;
             o   the Equal Credit Opportunity Act, prohibiting discrimination on
                 the  basis  of  race,  creed or  other  prohibited  factors  in
                 extending credit;
             o   the Fair Credit  Reporting  Act of 1978,  governing the use and
                 provision of information to credit reporting agencies;
             o   the Fair Debt  Collection  Act,  governing  the manner in which
                 consumer debts may be collected by collection  agencies;  and
             o   the rules  and  regulations  of the  various  federal  agencies
                 charged with the  responsibility  of implementing  such federal
                 laws.

The deposit operations of the bank also are subject to:

             o   the Right to  Financial  Privacy Act,  which  imposes a duty to
                 maintain  confidentiality  of  consumer  financial  records and
                 prescribes   procedures  for  complying   with   administrative
                 subpoenas of financial records; and
             o   the  Electronic  Funds  Transfer Act and Regulation E issued by
                 the Federal  Reserve Board to implement that act, which governs
                 automatic deposits to and withdrawals from deposit accounts and
                 customers'  rights  and  liabilities  arising  from  the use of
                 automated   teller  machines  and  other   electronic   banking
                 services.

         Capital  Regulations.  The federal  bank  regulatory  authorities  have
adopted  risk-based capital guidelines for banks and bank holding companies that
are  designed  to  make  regulatory  capital   requirements  more  sensitive  to
differences in risk profiles among banks and bank holding  companies and account
for  off-balance  sheet items.  The  guidelines  are  minimums,  and the federal
regulators  have  noted  that  banks and bank  holding  companies  contemplating
significant  expansion  programs  should not allow  expansion to diminish  their
capital ratios and should maintain ratios in excess of the minimums. We have not
received any notice  indicating  that either our holding  company or our bank is
subject to higher capital requirements.  The current guidelines require all bank
holding companies and federally-regulated banks to maintain a minimum risk-based
total  capital  ratio  equal to 8%, of which at least 4% must be Tier 1 capital.
Tier 1  capital  includes  common  shareholders'  equity,  qualifying  perpetual
preferred  stock,  and  minority  interests in equity  accounts of  consolidated
subsidiaries,  but excludes goodwill and most other intangibles and excludes the
allowance for loan and lease losses.  Tier 2 capital  includes the excess of any
preferred  stock  not  included  in  Tier  1  capital,   mandatory   convertible
securities,  hybrid  capital  instruments,  subordinated  debt and  intermediate
term-preferred stock, and general reserves for loan and lease losses up to 1.25%
of risk-weighted assets.



                                       11
<PAGE>

         Under these guidelines,  banks' and bank holding  companies' assets are
given  risk-weights of 0%, 20%, 50%, or 100%. In addition,  certain  off-balance
sheet  items  are given  credit  conversion  factors  to  convert  them to asset
equivalent  amounts  to  which  an  appropriate   risk-weight   applies.   These
computations result in the total  risk-weighted  assets. Most loans are assigned
to the 100% risk  category,  except for first  mortgage  loans fully  secured by
residential property and, under certain circumstances,  residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category,  except for municipal or state revenue bonds,  which have a
50% rating,  and direct  obligations of or obligations  guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.

         The  federal  bank  regulatory  authorities  have  also  implemented  a
leverage  ratio,  which is equal to Tier 1 capital  as a  percentage  of average
total  assets less  intangibles,  to be used as a supplement  to the  risk-based
guidelines.  The  principal  objective  of the  leverage  ratio  is to  place  a
constraint  on the maximum  degree to which a bank holding  company may leverage
its equity  capital  base.  The minimum  required  leverage  ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.

         The FDIC  Improvement  Act established a new  capital-based  regulatory
scheme designed to promote early  intervention for troubled banks which requires
the FDIC to choose the least  expensive  resolution  of bank  failures.  The new
capital-based  regulatory  framework contains five categories of compliance with
regulatory  capital  requirements,  including  "well  capitalized,"  "adequately
capitalized,"   "undercapitalized,"    "significantly   undercapitalized,"   and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total  risk-based  capital ratio of no less than 10%, and
the  bank  must not be  under  any  order  or  directive  from  the  appropriate
regulatory agency to meet and maintain a specific capital level.  Currently,  we
qualify as "well capitalized."

         Under the FDIC Improvement Act regulations,  the applicable  agency can
treat an  institution  as if it were in the next  lower  category  if the agency
determines (after notice and an opportunity for hearing) that the institution is
in an  unsafe or  unsound  condition  or is  engaging  in an  unsafe or  unsound
practice.   The  degree  of  regulatory  scrutiny  of  a  financial  institution
increases,  and the permissible activities of the institution  decreases,  as it
moves downward through the capital  categories.  Institutions that fall into one
of the three  undercapitalized  categories  may be required to do some or all of
the following:

             o   submit a capital restoration plan;
             o   raise additional capital;
             o   restrict  their  growth,  deposit  interest  rates,  and  other
                 activities;
             o   improve their management;
             o   eliminate management fees; or
             o   divest themselves of all or a part of their operations.

         These capital guidelines can affect us in several ways. If we grow at a
rapid pace, our capital may be depleted too quickly, and a capital infusion from
our holding  company  may be  necessary  which  could  impact our ability to pay
dividends.  Our capital levels  currently are adequate;  however,  rapid growth,
poor loan portfolio performance,  poor earnings performance, or a combination of
these factors could change our capital  position in a relatively short period of
time. If we fail to meet these capital requirements,  our bank would be required
to develop and file a plan with the Office of the  Comptroller  of the  Currency
describing  the  means  and  a  schedule  for  achieving  the  minimum   capital
requirements.





                                       12
<PAGE>

In addition,  our bank would  generally not receive  regulatory  approval of any
application  that  requires the  consideration  of capital  adequacy,  such as a
branch or merger  application,  unless our bank could  demonstrate  a reasonable
plan to meet the capital  requirement  within a reasonable  period of time. Bank
holding companies controlling financial institutions can be called upon to boost
the  institutions'   capital  and  to  partially   guarantee  the  institutions'
performance under their capital restoration plans.

         Enforcement  Powers. The Financial  Institutions  Reform,  Recovery and
Enforcement  Act expanded and increased civil and criminal  penalties  available
for use by the federal regulatory  agencies against depository  institutions and
certain   "institution-affiliated   parties."   Institution-affiliated   parties
primarily include management,  employees, and agents of a financial institution,
as well as  independent  contractors  and  consultants  such  as  attorneys  and
accountants  and  others  who  participate  in  the  conduct  of  the  financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the  submission  of  inaccurate  reports.  Civil  penalties may be as high as
$1,000,000 a day for such  violations.  Criminal  penalties  for some  financial
institution crimes have been increased to 20 years. In addition,  regulators are
provided  with  greater  flexibility  to commence  enforcement  actions  against
institutions and  institution-affiliated  parties.  Possible enforcement actions
include the termination of deposit  insurance.  Furthermore,  banking  agencies'
power to issue  cease-and-desist  orders were  expanded.  Such orders may, among
other things,  require  affirmative  action to correct any harm resulting from a
violation or practice, including restitution, reimbursement,  indemnification or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts,  or take
other actions as determined by the ordering agency to be appropriate.

         Effect of Governmental Monetary Policies.  Our earnings are affected by
domestic economic  conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had,  and are  likely  to  continue  to have,  an  important  impact on the
operating  results of commercial  banks through its power to implement  national
monetary  policy in order,  among other  things,  to curb  inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans,  investments and deposits through its open market
operations in United States government  securities and through its regulation of
the discount  rate on  borrowings  of member banks and the reserve  requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.

         Proposed   Legislation  and  Regulatory  Action.  New  regulations  and
statutes are regularly proposed that contain wide-ranging proposals for altering
the  structures,  regulations,  and  competitive  relationships  of the nation's
financial  institutions.  We cannot predict whether or in what form any proposed
regulation or statute will be adopted or the extent to which our business may be
affected by any new regulation or statute.


Item 2.  Description of Property

         Gaffney  Property.  Our principal place of business and the main office
of the bank is located on property  that we own at the corner of Granard  Street
and West  Meadow  Street in Gaffney,  South  Carolina.  The banking  facility is
approximately  11,000 square feet and cost approximately  $1,500,000,  including
furniture,  fixtures, and equipment.  We completed construction of this facility
in late 1998 and commenced operations from this new facility in January 1999.



                                       13
<PAGE>

         Blacksburg  Property.  We also  operate  a branch  of the bank out of a
Blacksburg  office  facility  at 207 West  Cherokee  Street,  Blacksburg,  South
Carolina 29702. The Blacksburg site, which we own, is on approximately  one acre
of land. We have  constructed a permanent  banking facility of 2,550 square feet
on the site at an approximate cost of $600,000, which was paid out of funds from
operations of the bank and, to the extent necessary,  remaining  proceeds of the
offering.

         Chesnee Highway Property. We also operate a branch of the bank out of a
second Gaffney office facility at 626 Chesnee Highway,  Gaffney,  South Carolina
29341. The Chesnee Highway site, which we own, is on approximately  two acres of
land. We have  constructed a permanent  banking facility of 2,550 square feet on
the site at an  approximate  cost of $700,000,  which was paid out of funds from
operations of the bank.

         We believe that these facilities will adequately serve our needs for at
least the next 12 months of operation.

Item 3.  Legal Proceedings.
--------------------------

         Neither  the  company  nor the bank is a party to,  nor is any of their
property the subject of, any material  pending legal  proceedings  incidental to
the business of the company or the bank.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

Item 5.  Market for Common Equity and Related Stockholder Matters.
-----------------------------------------------------------------

         Our common  stock is quoted on the OTC  Bulletin Board under the
symbol  "FNBC.OB."  Market  makers of our common stock  include ASG  Securities,
Inc.,  Baird,  Patrick & Co., Inc.,  Hill Thompson Magid,  L.P.,  Schwab Capital
Markets L.P., and Monroe  Securities,  Inc. As of December 31, 2002,  there were
531 shareholders of record.

         Our ability to pay cash  dividends is dependent  upon receiving cash in
the form of  dividends  from  First  National  Bank of the  Carolinas.  However,
certain  restrictions  exist regarding the ability of the bank to transfer funds
to the company in the form of cash dividends. All of the bank's dividends to the
company are payable only from the undivided profits of the bank.

         The  following  table  sets forth the high and low bid  information  as
quoted on the OTC Bulletin  Board during the periods  indicated.  The quotations
reflect  inter-dealer prices,  without retail mark-up,  mark-down or commission,
and may not represent actual transactions.
<TABLE>
<CAPTION>
                      -------------------------------------- --------------------------------------
                                      2002                                   2001
                      -------------------------------------- --------------------------------------
                            High                Low                High                Low
                      ------------------ ------------------- ------------------ -------------------

<S>                        <C>                 <C>                <C>                 <C>
First Quarter              $ 12.61             $ 9.76             $  9.52             $  9.52

Second Quarter               13.00              10.47                9.52                6.90

Third Quarter                11.25              10.50               14.28                9.52

Fourth Quarter               11.00              10.51               11.90                9.76
</TABLE>



                                       14
<PAGE>

         The following table sets forth equity  compensation plan information at
December 31, 2002.

<TABLE>
<CAPTION>
                            Equity Compensation Plan Information
                                                                                     Number of securities
                              Number of securities                                 remaining available for
                                  to be issued            Weighted-average          future issuance under
                                upon exercise of          exercise price of       equity compensation plans
                              outstanding options,      outstanding options,        (excluding securities
Plan Category                 warrants and rights        warrants and rights       reflected in column(a))
-------------                 -------------------        -------------------       -----------------------
<S>                                 <C>                        <C>                          <C>
Equity compensation
plans approved by
security holders                    129,588                    $ 9.63                       30,484
</TABLE>


Item 6.  Management's Discussion and Analysis or Plan of Operation
------------------------------------------------------------------

         In response to this Item, the information  contained on pages 4 through
18 of the company's  Annual Report to  Shareholders  for the year ended December
31, 2002 is incorporated herein by reference.

Item 7.  Financial Statements
-----------------------------

         In response to this Item, the information contained on pages 19 through
39 of the company's  Annual Report to  Shareholders  for the year ended December
31, 2002 is incorporated herein by reference.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
------------------------------------------------------------------------
Financial Disclosure
--------------------

         On October 29,  2002,  the  Company  dismissed  the firm of  Tourville,
Simpson & Caskey,  L.L.P. and replaced them with Dixon Odom PLLC as the auditors
of the Company effective as of that date. The decision to change accountants was
recommended and approved by the audit committee with  authorization by the board
of directors of the Company.

         The reports of Tourville,  Simpson & Caskey on the Company's  financial
statements for the past two fiscal years did not contain an adverse opinion or a
disclaimer  of opinion and were not  qualified  or  modified as to  uncertainty,
audit scope, or accounting principles.

         In connection with the audits of the Company's financial statements for
the fiscal year ended December 31, 2000,  2001,  and in the  subsequent  interim
period,  there were no  disagreements  with  Tourville,  Simpson & Caskey on any
matters of accounting  principles or practices,  financial statement disclosure,
or auditing scope and procedures  which, if not resolved to the  satisfaction of
Tourville,  Simpson & Caskey,  would have caused Tourville,  Simpson & Caskey to
make  reference  to the matter in their  report.  During  the fiscal  year ended
December 31, 2000,  2001, and in the subsequent  interim  period,  there were no
"reportable  events"  to  describe  as  specified  in Item  304(a)(1)(iv)(B)  of
Regulation S-B.

         On  October  29,  2002,  the  Company  engaged  Dixon  Odom PLLC as its
independent  auditors for the fiscal year ending December 31, 2002, to audit the
Company's financial statements. During the Company's most recent fiscal year and
the subsequent  interim period  preceding the engagement of Dixon Odom PLLC, the
Company did not consult Dixon Odom PLLC on any matter requiring disclosure under
Item 304(a)(2) of Regulation S-B.



                                       15
<PAGE>

As of December 31, 2002, our former accountants, Tourville, Simspon, and Caskey,
LLP, ceased doing business.

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
----------------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------

         In response to this Item,  the  information  contained on page 9 of the
company's  Proxy  Statement for the Annual Meeting of Shareholders to be held on
April 22, 2003 is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

         In response to this Item, the information  contained on pages 5 through
6 of the company's  Proxy Statement for the Annual Meeting of Shareholders to be
held on April 22, 2003 is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         In response to this Item,  the  information  contained on page 7 of the
company's  Proxy  Statement for the Annual Meeting of Shareholders to be held on
April 22, 2003 is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         In response to this Item,  the  information  contained on page 9 of the
company's  Proxy  Statement for the Annual Meeting of Shareholders to be held on
April 22, 2003 is incorporated herein by reference.

Item 13.  Exhibits, List and Reports on Form 8-K
------------------------------------------------

(a)  The following documents are filed as part of this report:

Exhibit
Number      Description
-------     -----------

3.1         Articles  of   Incorporation  of  the   Company   (incorporated   by
            reference to Exhibit 3.1 of the Registration  Statement on Form S-1,
            File No. 333-1546)

3.2         Bylaws  of  the  Company  (incorporated   by  reference  to  Exhibit
            3.2 of the Registration Statement on Form S-1, File No. 333-1546)

4.1         Provisions in the  Company's  Articles of  Incorporation and  Bylaws
            defining  the  rights  of  holders  of the  Company's  Common  Stock
            (incorporated  by  reference  to  Exhibit  4.1 of  the  Registration
            Statement on Form S-1, File No. 333-1546)

10.1        Option Agreement dated October 20, 1995,  between James L. Moss, as
            seller, and FNB Bancshares,  Inc., as purchaser,  for the Blacksburg
            office  property  (incorporated  by reference to Exhibit 10.1 of the
            Registration Statement on Form S-1, File No. 333-1546)

10.2        Option  Agreement  dated  December  31,  1995,  between  William  K.
            Brumbach,  Jr.,  Linwood B. Brumbach,  Evelyn B. Sanles and Patricia
            Brumbach Clary, as sellers, and





                                       16
<PAGE>

            FNB Bancshares, Inc., as purchaser, for the secondary parcel for the
            Gaffney Office property  (incorporated  by reference to Exhibit 10.2
            of the Registration Statement on Form S-1, File No. 333-1546)

10.3        Option  Agreement  dated January 10, 1996,  between Wylie L. Hamrick
            and Catherine H. Beattie, as sellers,  and FNB Bancshares,  Inc., as
            purchaser,  for the primary parcel for the Gaffney  Office  property
            (incorporated  by  reference  to  Exhibit  10.3 of the  Registration
            Statement on Form S-1, File No. 333-1546)

10.4        Line of Credit  Note dated  September  27,  1995,  by The Company to
            The Bankers Bank  (incorporated  by reference to Exhibit 10.4 of the
            Registration Statement on Form S-1, File No. 333-1546)

10.5.       Employment Agreement dated January 17, 1996, between the Company and
            V.  Stephen Moss  (incorporated  by reference to Exhibit 10.5 of the
            Registration Statement on Form S-1, File No. 333-1546)

10.6.       Escrow  Agreement dated  March 8, 1996,  between The Company and The
            Bankers  Bank  (incorporated  by  reference  to Exhibit  10.6 of the
            Registration Statement on Form S-1, File No. 333-1546)

10.7        Commitment  Letter  dated March 27, 1996, from Spartanburg  National
            Bank for a $150,000  line of credit  (incorporated  by  reference to
            Exhibit 10.7 of the  Registration  Statement  on Form S-1,  File No.
            333-1546)

10.8        Stock  Option  Plan  dated  as of  March 25, 1997  (incorporated  by
            reference to Exhibit 10.7 of the Annual  Report on Form 10-KSB filed
            by the Company for the year ended December 31, 1996)

13          Annual Report to Shareholders for the year ended December 31, 2002

21.1        Subsidiaries of the Company

24          Power of Attorney (Contained on signature page hereof)


-------------------------------

(b)  Reports on Form 8-K
     -------------------

         The Company filed a Form 8-K on October 29, 2002 to disclose that the
Company dismissed the firm of Tourville, Simpson & Caskey, L.L.P. and replaced
them with Dixon Odom PLLC as the auditors of the Company effective as of that
date.

         The Company filed a Form 8-K on November 12, 2002 to disclose that the
Chief Executive Officer, V. Stephen Moss, and the Chief Financial Officer,
Kimberly D. Barrs, each furnished to the SEC the certification required pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.




                                       17
<PAGE>



Item 14.  Controls and Procedures
---------------------------------

         Within the 90 days prior to the date of this report,  we carried out an
evaluation  under the supervision and with the  participation of our management,
including  our Chief  Executive  Officer  and Chief  Financial  Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  pursuant to  Securities  Exchange Act Rule  13a-14.  Based upon that
evaluation,  the Chief Executive  Officer and Chief Financial  Officer concluded
that our disclosure  controls and  procedures  are effective in timely  alerting
them to material  information relating to the Company required to be included in
our periodic SEC Filings.  The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance  that any design will  succeed in achieving  its stated goals under
all  potential  future  conditions,  regardless  of how  remote.  There  were no
significant  changes in our  internal  controls or in other  factors  that could
significantly affect these controls subsequent to the date of their evaluation.





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<PAGE>



                                   SIGNATURES

         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934 (the "Exchange Act"), the registrant  caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        FNB BANCSHARES, INC.


Date:   March  24, 2003              By:  /s/ V. Stephen Moss
       -----------------                ------------------------------------
                                        V. Stephen Moss
                                        President and Chief Executive Officer


         KNOW  ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears  below  constitutes  and appoints V. Stephen  Moss,  his true and lawful
attorney-in-fact  and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this  Registration  Statement,  and to file the same, with
all exhibits  thereto,  and other  documents in connection  therewith,  with the
Securities and Exchange  Commission,  granting unto  attorney-in-fact  and agent
full  power  and  authority  to do and  perform  each and  every  act and  thing
requisite  or necessary  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming  all  that   attorney-in-fact   and  agent,   or  his  substitute  or
substitutes, may lawfully do or cause to be done by virtue hereof.

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant in the  capacities and on
the dates indicated.


Signature                       Title                            Date
---------                       -----                            ----

/s/ Richard D. Gardner                                        March 24, 2003
-----------------------------                                 --------------
Richard D. Gardner              Director


/s/ Barry Hamrick                                             March 24, 2003
-----------------------------                                 --------------
Barry Hamrick                   Director


/s/ Haskell D. Mallory                                        March 24, 2003
-----------------------------                                 --------------
Haskell D. Mallory              Director


/s/ Bill Mason                                                March 24, 2003
-----------------------------                                 --------------
Bill Mason                      Director



                                       19
<PAGE>



Signature                         Title                          Date
---------                         -----                          ----

/s/ V. Stephen Moss                                           March 24, 2003
-----------------------------                                 --------------
V. Stephen Moss                 Director;
                                President and Chief
                                Executive Officer

/s/ Harold D. Pennington, Jr.                                 March 24, 2003
-----------------------------                                 --------------
Harold D. Pennington, Jr.       Director


/s/ Harold D. Pennington, Sr.                                 March 24, 2003
-----------------------------                                 --------------
Harold D. Pennington, Sr.       Director


/s/ Heyward W. Porter                                         March 24, 2003
-----------------------------                                 --------------
Heyward W. Porter               Director

/s/ Kimberly D. Barrs           Chief Financial Officer,      March 24, 2003
-----------------------------                                 --------------
Kimberly D. Barrs               Principal Accounting and
                                Financial Officer






                                       20
<PAGE>





                                INDEX TO EXHIBITS

Exhibit
Number            Description

3.1   Articles of  Incorporation of the Company  (incorporated  by  reference to
Exhibit 3.1 of the Registration Statement on Form S-1, File No. 333-1546)

3.2   Bylaws of the Company (incorporated  by  reference  to Exhibit  3.2 of the
Registration Statement on Form S-1, File No. 333-1546)

4.1   Provisions in the Company's Articles of Incorporation  and Bylaws defining
the rights of holders of the Company's  Common Stock  (incorporated by reference
to Exhibit 4.1 of the Registration Statement on Form S-1, File No. 333-1546)

10.1  Option Agreement dated October 20, 1995, between James L. Moss, as seller,
and FNB  Bancshares,  Inc., as purchaser,  for the  Blacksburg  office  property
(incorporated by reference to Exhibit 10.1 of the Registration Statement on Form
S-1, File No. 333-1546)

10.2  Option  Agreement  dated  December 31, 1995,  between William K. Brumbach,
Jr.,  Linwood B.  Brumbach,  Evelyn B. Sanles and Patricia  Brumbach  Clary,  as
sellers,  and FNB Bancshares,  Inc., as purchaser,  for the secondary parcel for
the Gaffney Office  property  (incorporated  by reference to Exhibit 10.2 of the
Registration Statement on Form S-1, File No. 333-1546)

10.3  Option Agreement  dated  January 10, 1996,  between  Wylie L.  Hamrick and
Catherine H. Beattie, as sellers,  and FNB Bancshares,  Inc., as purchaser,  for
the primary parcel for the Gaffney Office property (incorporated by reference to
Exhibit 10.3 of the Registration Statement on Form S-1, File No. 333-1546)

10.4  Line  of  Credit  Note  dated  September  27,  1995, by The Company to The
Bankers Bank  (incorporated  by  reference  to Exhibit 10.4 of the  Registration
Statement on Form S-1, File No. 333-1546)

10.5. Employment  Agreement  dated  January 17, 1996, between the Company and V.
Stephen Moss  (incorporated  by  reference  to Exhibit 10.5 of the  Registration
Statement on Form S-1, File No. 333-1546)

10.6. Escrow Agreement  dated March 8, 1996, between The Company and The Bankers
Bank (incorporated by reference to Exhibit 10.6 of the Registration Statement on
Form S-1, File No. 333-1546)

10.7  Commitment Letter dated March 27, 1996, from Spartanburg National Bank for
a $150,000  line of credit  (incorporated  by  reference  to Exhibit 10.7 of the
Registration Statement on Form S-1, File No. 333-1546)

10.8  Stock Option Plan dated as of March 25, 1997 (incorporated by reference to
Exhibit  10.7 of the Annual  Report on Form 10-KSB  filed by the Company for the
year ended December 31, 1996)

13    Annual Report to Shareholders for the year ended December 31, 2002

21.1  Subsidiaries of the Company

24    Power of Attorney (Contained on signature page hereof)


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