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FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2003

FIRST NATIONAL BANCSHARES, INC.

(exact name of registrant as specified in its charter)


|                               |  |            |  |                                   
|------------------------------ |  | ---------- |  | ----------------------------------
|Florida                        |  | 333-60283  |  | 06-1522028                        
|                               |  |            |  |                                   
|(Jurisdiction of Organization) |  | Commission |  | I.R.S. Employer
Identification No.

|                                                                           |  |                 
|-------------------------------------------------------------------------- |  | ----------------
|5817 Manatee Avenue West, Bradenton, Florida
(Address of principal office) |  | 34209
(Zip Code)

Registrants telephone number, including area code: (941) 794-6969

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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 of the past 90 days.

Yes [X]  No [   ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                                       |  |                                   
|-------------------------------------- |  | ----------------------------------
|Common stock, par value $.10 per share |  | 1,992,736 shares                  
|                                       |  |                                   
|(class)                                |  | Outstanding as of November 7, 2003





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TABLE OF CONTENTS



|                                      |                                                                                       |                            |  |  |  |  |  | 
|------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION        
|                                      | Item 1. Financial Statements                                                         
|                                      |                                                                                       | Consolidated Balance Sheet
|                                      |                                                                                       | Statement of Income       
|                                      |                                                                                       | STATEMENTS OF CASH FLOWS  
|                                      | Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                      | Quantitative and Qualitative Disclosure About Market Risk                            
|                                      | Disclosure of Evaluation of Disclosure Controls and Procedures                       
|Part II. Other Information           
|                                      | Item 1: Legal Proceedings Against the Bank                                           
|                                      | Item 2: Changes in Securities and Use of Proceeds                                    
|                                      | Items 3: Defaults under Senior Securities                                            
|                                      | Item 4: Submission of Matters to a vote of Security Holders                          
|                                      | Item 5: Other Information                                                            
|                                      | Item 6: Exhibits and Reports on Form 8-K                                             
|SIGNATURES                           
|Ex-31.1 Section 302 CEO Certification
|Ex-31.2 Section 302 CFO Certification
|Ex-32.1 Section 906 CEO Certification
|Ex-32.2 Section 906 CFO Certification



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##### Table of Contents



FIRST NATIONAL BANK OF MANATEE
Index to Form 10-Q
For the period ended September 30, 2003

|                              |    |  |         |                                                                                       |                                                                                                             |    |      |   | 
|----------------------------- | -- |  | ------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | -- | ---- | - | 
|                              |    |  |         |                                                                                       |                                                                                                             |    | Page
|PART I. FINANCIAL INFORMATION
|                              |    |  | Item 1. | Financial Statements                                                                  |                                                                                                             |    |      |   | 
|                              |    |  |         |                                                                                       | Condensed Consolidated Balance Sheets,
September 30, 2003 and December 31, 2002                             |    |      | 1 | 
|                              |    |  |         |                                                                                       | Condensed Consolidated Statements
of Income for the three and nine months ended
September 30, 2003 and 2002 |    |      | 3 | 
|                              |    |  |         |                                                                                       | Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 2003 and 2002       |    |      | 4 | 
|                              |    |  | Item 2. | Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                                                                             | 7  |     
|                              |    |  | Item 3. | Quantitative and Qualitative Disclosure About Market Risk                             |                                                                                                             | 10 |     
|                              |    |  | Item 4. | Disclosure of Evaluation of Disclosure Controls and Procedures                        |                                                                                                             | 11 |     
|PART II. OTHER INFORMATION.  
|                              |    |  | Item 1. | Legal Proceedings                                                                     |                                                                                                             | 13 |     
|                              |    |  | Item 2. | Changes in Securities and Use of Proceeds                                             |                                                                                                             | 13 |     
|                              |    |  | Item 3. | Defaults under Senior Securities                                                      |                                                                                                             | 13 |     
|                              |    |  | Item 4. | Submission of Matters to a vote of Security Holders                                   |                                                                                                             | 13 |     
|                              |    |  | Item 5. | Other Information                                                                     |                                                                                                             | 13 |     
|                              |    |  | Item 6. | Exhibits and Reports on Form 8-K                                                      |                                                                                                             | 13 |     
|SIGNATURES                    | 14 | 





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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




FIRST NATIONAL BANCSHARES, INC.
Consolidated Balance Sheet

Assets (000s)

|                                 |  |              |         |             |  |  |         | 
|-------------------------------- |  | ------------ | ------- | ----------- |  |  | ------- | 
|                                 |  | September 30 |         | December 31
|                                 |  | 2003         |         | 2002       
|                                 |  |              |         |            
|                                 |  | (Unaudited)  |         | **         
|Cash and Due from Banks          |  |              | 9,086   |             |  |  | 7,995   | 
|Int. Bearing Bank Balances       |  |              | 67      |             |  |  | 5,454   | 
|Fed Funds Sold                   |  |              | 0       |             |  |  | 0       | 
|Investment Securities            |  |              | 44,963  |             |  |  | 40,817  | 
|Unrecognized Security Gains      |  |              | 118     |             |  |  | 963     | 
|Loans                            |  |              | 179,697 |             |  |  | 158,530 | 
|Less Allowance for Credit Losses |  |              | -1,796  |             |  |  | -1,704  | 
|Deferred Loan Fees (earned)      |  |              | -299    |             |  |  | -235    | 
|Premises and Equipment, Net      |  |              | 7,854   |             |  |  | 8,039   | 
|Accrued Interest Receivable      |  |              | 864     |             |  |  | 975     | 
|Other R. E. & Assets Owned       |  |              | 5       |             |  |  | 16      | 
|Other Assets                     |  |              | 1,988   |             |  |  | 1,311   | 
|Total Assets                     |  |              | 242,547 |             |  |  | 222,161 | 

**Condensed from audited financial statements

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Liabilities and Stockholders Equity (000s)

|                                                    |  |              |         |             |  |  |         | 
|--------------------------------------------------- |  | ------------ | ------- | ----------- |  |  | ------- | 
|                                                    |  | September 30 |         | December 31
|                                                    |  | 2003         |         | 2002       
|                                                    |  |              |         |            
|Deposits                                            |  |              |         |             |  |  |         | 
|Demand, non-interest bearing                        |  |              | 31,526  |             |  |  | 23,958  | 
|Demand, interest bearing                            |  |              | 32,857  |             |  |  | 31,735  | 
|Time (CDs, MMs, & Savings Accounts)               |  |              | 128,616 |             |  |  | 124,818 | 
|TOTAL DEPOSITS                                      |  |              | 192,999 |             |  |  | 180,511 | 
|Repurchase Agreements                               |  |              | 14,244  |             |  |  | 15,811  | 
|Accrued Interest Payable                            |  |              | 591     |             |  |  | 722     | 
|Accounts Payable and Other Liabilities              |  |              | 682     |             |  |  | 621     | 
|Fed Funds Purchased and Other Short
Term Borrowings |  |              | 12,570  |             |  |  | 4,500   | 
|TOTAL LIABILITIES                                   |  |              | 221,086 |             |  |  | 202,165 | 
|Stockholders Equity                                |  |              |         |             |  |  |         | 
|Common Stock, par value $.10 per share;             |  |              |         |             |  |  |         | 
|Authorized 2,500,000 shares;                        |  |              |         |             |  |  |         | 
|Issued and Outstanding, 1,992,736                   |  |              | 199     |             |  |  | 185     | 
|Capital Surplus                                     |  |              | 16,163  |             |  |  | 13,888  | 
|Unrecognized Gains & Losses                         |  |              | 73      |             |  |  | 601     | 
|Retained Earnings                                   |  |              | 5,026   |             |  |  | 5,322   | 
|Net Stockholders Equity                            |  |              | 21,461  |             |  |  | 19,996  | 
|Total Liabilities and Stockholders Equity          |  |              | 242,547 |             |  |  | 222,161 | 

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FIRST NATIONAL BANCSHARES, INC

Statement of Income

For the Period January 1 through September 30 (000s)

|                            |                                   |                                     |                                |                     |       |          |       |          |       |          |       |          |       |       |       |       |       |       |       | 
|--------------------------- | --------------------------------- | ----------------------------------- | ------------------------------ | ------------------- | ----- | -------- | ----- | -------- | ----- | -------- | ----- | -------- | ----- | ----- | ----- | ----- | ----- | ----- | ----- | 
|                            |                                   |                                     |                                |                     |       | 9 months |       | 9 months |       | 3 months |       | 3 months
|                            |                                   |                                     |                                |                     |       | 2003     |       | 2002     |       | 2003     |       | 2002    
|                            |                                   |                                     |                                |                     |       |          |       |          |       |          |       |         
|Interest Income:            |                                   |                                     |                                |                     |       |          |       |          |       |          |       |          |       |       |       |      
|                            | Loan Interest (excluding fees)    |                                     |                                | 7,795               |       |          |       | 8,112    |       |          |       | 2,598    |       |       |       | 2,720 |      
|                            | Loan Fees                         |                                     |                                | 208                 |       |          |       | 114      |       |          |       | 77       |       |       |       | 33    |      
|                            | Investment Securities             |                                     |                                |                     |       |          |       |          |       |          |       |          |       |       |       |       |      
|                            |                                   | Taxable                             |                                |                     | 899   |          |       |          | 1,242 |          |       |          | 281   |       |       |       | 408   |      
|                            |                                   | Exempt from Federal Tax             |                                |                     | 280   |          |       |          | 276   |          |       |          | 94    |       |       |       | 91    |      
|                            |                                   | Interest Bearing Bank Deposits      |                                |                     | 80    |          |       |          | 63    |          |       |          | 8     |       |       |       | 27    |      
|                            |                                   | Federal Funds Sold                  |                                |                     | 0     |          |       |          | 0     |          |       |          | 0     |       |       |       | 0     |      
|                            |                                   |                                     | Total Interest Income          |                     | 9,262 |          |       |          | 9,807 |          |       |          | 3,058 |       |       |       | 3,279 |      
|Interest Expense            |                                   |                                     | 2,289                          |                     |       |          | 2,904 |          |       |          | 731   |          |       |       | 967   |      
|                            |                                   |                                     |                                | Net Interest Income |       |          | 6,973 |          |       |          | 6,903 |          |       |       | 2,327 |       |       |       | 2,312 | 
|Provision for Credit Losses |                                   |                                     | 172                            |                     |       |          | 235   |          |       |          | 108   |          |       |       | 46    |      
|Net Interest Income         |                                   |                                     |                                |                     |       |          |       |          |       |          |       |          |       |       |       |      
|                            | After Provision for Credit Losses |                                     |                                | 6,801               |       |          |       | 6,668    |       |          |       | 2,219    |       |       |       | 2,266 |      
|Other Operating Income      |                                   |                                     |                                |                     |       |          |       |          |       |          |       |          |       |       |       |      
|                            |                                   | Service Charges on deposit accounts |                                |                     | 346   |          |       |          | 369   |          |       |          | 114   |       |       |       | 130   |      
|                            |                                   | Investment Security Gains           |                                |                     | 86    |          |       |          | -1    |          |       |          | 3     |       |       |       | -1    |      
|                            |                                   | Trust Fees & Investment Sales       |                                |                     | 663   |          |       |          | 613   |          |       |          | 214   |       |       |       | 194   |      
|                            |                                   | Other Income                        |                                |                     | 361   |          |       |          | 267   |          |       |          | 114   |       |       |       | 81    |      
|                            |                                   |                                     | Total Other Income             |                     |       | 1,456    |       |          |       | 1,248    |       |          |       | 445   |       |       |       | 404   |      
|Other Operating Expenses    |                                   |                                     |                                |                     |       |          |       |          |       |          |       |          |       |       |       |      
|                            |                                   | Salaries & Employee Benefits        |                                |                     | 3,416 |          |       |          | 3,022 |          |       |          | 1,181 |       |       |       | 1,012 |      
|                            |                                   | Occupancy & Equipment Expense       |                                |                     | 904   |          |       |          | 844   |          |       |          | 309   |       |       |       | 287   |      
|                            |                                   | Other Expenses                      |                                |                     | 1,312 |          |       |          | 1,135 |          |       |          | 415   |       |       |       | 390   |      
|                            |                                   |                                     | Total Other Operating Expenses |                     |       | 5,632    |       |          |       | 5,001    |       |          |       | 1,905 |       |       |       | 1,689 |      
|                            |                                   |                                     | Profit Before Tax              |                     |       | 2,625    |       |          |       | 2,915    |       |          |       | 759   |       |       |       | 981   |      
|Estimated Income Taxes      |                                   |                                     | 903                            |                     |       |          | 1,021 |          |       |          | 258   |          |       |       | 350   |      
|                            |                                   |                                     | Profit After Tax               |                     | $     | 1,722    |       |          | $     | 1,894    |       |          | $     | 501   |       |       | $     | 631   |      

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FIRST NATIONAL BANCSHARES, INC
EARNINGS PER SHARE

For the Period January 1 through September 30

|                                          |  |          |           |          |  |          |           |          |  |   |           |  |  |   |           | 
|----------------------------------------- |  | -------- | --------- | -------- |  | -------- | --------- | -------- |  | - | --------- |  |  | - | --------- | 
|                                          |  | 9 months |           | 9 months |  | 3 months |           | 3 months
|                                          |  | 2003     |           | 2002     |  | 2003     |           | 2002    
|                                          |  |          |           |          |  |          |           |         
|Profit After Tax                          |  | $        | 1,722,000 |          |  | $        | 1,894,000 |          |  | $ | 501,000   |  |  | $ | 631,000   | 
|Average Shares Outstanding1               |  |          | 1,964,894 |          |  |          | 1,930,426 |          |  |   | 1,992,736 |  |  |   | 1,931,281 | 
|Earnings per Share - Basic                |  | $        | .88       |          |  | $        | .98       |          |  | $ | .25       |  |  | $ | .33       | 
|Average Shares Outstanding Fully diluted1 |  |          |           |          |  |          | 2,094,298 |          |  |   |           |  |  |   | 2,094,182 | 
|Earnings per Share Fully Diluted          |  |          |           |          |  | $        | .90       |          |  |   |           |  |  | $ | .30       | 

1.     Adjusted for stock dividends paid on September 30, 2002 and 2003.

FIRST NATIONAL BANCSHARES, INC
COMPREHENSIVE INCOME
For the Period January 1 through September 30 (000s)

COMPREHENSIVE INCOME: Under FASB Statement of Financial Accounting Standards
No. 130, Reporting Comprehensive Income, the Company is required to report a
measure of all changes in equity, not only reflecting net income but certain
other changes as well. At September 30, 2003 and 2002, comprehensive income was
as follows:

|                                         |  |          |       |          |  |          |       |          |  |    |     |   |  |   |     | 
|---------------------------------------- |  | -------- | ----- | -------- |  | -------- | ----- | -------- |  | -- | --- | - |  | - | --- | 
|                                         |  | ($000s)
|                                        
|                                         |  | 9 months |       | 9 months |  | 3 months |       | 3 months
|                                         |  | 2003     |       | 2002     |  | 2003     |       | 2002    
|                                         |  |          |       |          |  |          |       |         
|Profit After Tax                         |  | $        | 1,722 |          |  | $        | 1,894 |          |  | $  | 501 |   |  | $ | 631 | 
|Unrealized Securities Gains Net of Taxes |  | ($       | 528   | )        |  | $        | 467   |          |  | ($ | 556 | ) |  | $ | 103 | 
|                                         |  |          |       |          |  |          |       |          |  |    |     |   |  |   |     | 
|Comprehensive Income                     |  | $        | 1,194 |          |  | $        | 2,361 |          |  | ($ | 55  | ) |  | $ | 734 | 

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STATEMENTS OF CASH FLOWS
(000s)
For the Period January 1 through September 30 (000s)

|                                                                                            |                                                                               |   |        |         |      |   |         |         |  
|------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | - | ------ | ------- | ---- | - | ------- | ------- | -
|                                                                                            |                                                                               |   | 2003   |         | 2002
|                                                                                            |                                                                               |   |        |         |     
|Operating activities                                                                        |                                                                               |   |        |         |      |   |         |        
|Net Income                                                                                  |                                                                               |   | 1,722  |         |      |   | 1,894   |        
|                                                                                            | Adjustments to reconcile net income to
cash provided by operating activities: |   |        |         |      |   |         |         |  
|                                                                                            | Depreciation & leasehold amortization                                         |   |        | 387     |      |   |         | 267     |  
|                                                                                            | Allowance for loan losses net of charge offs                                  |   |        | 92      |      |   |         | 117     |  
|                                                                                            | Decrease (increase) in accrued interest receivable                            |   |        | 111     |      |   |         | 98      |  
|                                                                                            | Increase (decrease) in accrued interest payable and other liabilities         |   |        | 254     |      |   |         | (302    | )
|                                                                                            | Decrease (increase) in other assets                                           |   |        | (664    | )    |   |         | 1,761   |  
|                                                                                            |                                                                               |   |        |         |      |   |         |        
|Net cash provided by operating activities                                                   |                                                                               |   | 1,902  |         |      |   | 3,835   |        
|Investing activities                                                                        |                                                                               |   |        |         |      |   |         |        
|                                                                                            | Purchase of securities , net of payments and sales                            |   |        | (4,152  | )    |   |         | (1,329  | )
|                                                                                            | Loans originated, net of principal collections                                |   |        | (21,105 | )    |   |         | (12,308 | )
|                                                                                            | Capital expenditures                                                          |   |        | (202    | )    |   |         | (2,458  | )
|                                                                                            | Proceeds from sale of other real estate owned                                 |   |        | 0       |      |   |         | 569     |  
|                                                                                            | Decrease (increase) in overnight funds sold                                   |   |        | 0       |      |   |         | 0       |  
|                                                                                            |                                                                               |   |        |         |      |   |         |        
|                                                                                            | Net cash provided (used) by investing activities                              |   |        | (25,459 | )    |   |         | (15,526 | )
|Financing activities                                                                        |                                                                               |   |        |         |      |   |         |        
|Net increase (decrease) in demand deposits, NOW
accounts, money market and savings accounts |                                                                               |   | 18,182 |         |      |   | (4,035  | )      
|Net
increase (decrease) - certificates of deposit                                           |                                                                               |   | (5,694 | )       |      |   | (2,703  | )      
|Increase (decrease) in securities sold under
agreements to repurchase                       |                                                                               |   | (1,567 | )       |      |   | 8,329   |        
|Increase (decrease) in overnight funds purchased                                            |                                                                               |   | 2,570  |         |      |   | 0       |        
|Term borrowings                                                                             |                                                                               |   | 5,500  |         |      |   | 0       |        
|Dividends paid                                                                              |                                                                               |   | (5     | )       |      |   | (5      | )      
|Proceeds from issuance of common stock                                                      |                                                                               |   | 275    |         |      |   | 19      |        
|Retirement of common stock                                                                  |                                                                               |   | 0      |         |      |   | 0       |        
|                                                                                            |                                                                               |   |        |         |      |   |         |        
|Net cash (used) provided by financing activities                                            |                                                                               |   | 19,261 |         |      |   | 1,605   |        
|Net increase in cash and due from banks                                                     |                                                                               |   | (4,296 | )       |      |   | (10,086 | )      
|Cash and due from banks at beginning of year                                                |                                                                               |   | 13,449 |         |      |   | 20,967  |        
|                                                                                            |                                                                               |   |        |         |      |   |         |        
|Cash and due from banks at end of quarter                                                   |                                                                               | $ | 9,153  |         |      | $ | 10,881  |        
|Schedule of non-cash investing activities                                                   |                                                                               |   |        |         |      |   |         |        
|Loans transferred to other real estate owned                                                |                                                                               | $ | 0      |         |      | $ | 0       |        

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NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1 - Basis of Financial Reporting

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with instructions to Form 10-Q and do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all normal and recurring adjustments necessary for fair presentation of such
financial statements have been included. For further information, refer to the
consolidated financial statements and the notes thereto included in the Banks
annual report on Form 10-K for the year ended December 31, 2002.

Results for the nine month period ended September 30, 2003, may not necessarily
be indicative of those to be expected for the entire year.

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Managements Discussion and Analysis of Financial Condition and Results of
Operations.

Overview.

The 1ST National Bank & Trust (formerly First National Bank of Manatee)
(the Bank) commenced operations on July 18, 1986. The Banks activities since
inception have consisted of accepting deposits, originating a variety of loans.
The Banks first branch was opened on Anna Maria Island (5 miles west of the
main office) in October, 1994. The second branch was opened in May of 1996 on
State Road 64 (5 miles east of the main office). In January of 1997 year, the
bank opened its third branch on State Road 70 (8 miles southeast of the main
office). In December of 1997, the bank acquired a site at University Blvd. and
Lakewood Ranch Blvd. for a future branch. That site was sold in 2001. The
Bank opened its fourth branch in November of 2000 at the corner of US 301 and
Old Tampa Road in Ellenton (Manatee County). The bank also opened a Trust
Department in March of 1995. The Bank, as a local independent bank, follows a
philosophy of developing its equity and deposit base and focusing its lending
activities within its community. The Banks underlying lending policy has been
and is anticipated to continue being directed toward better-than-normal credit
risks.

On January 1, 1999 the Bank was merged into First National Bancshares,
Inc., a Florida corporation (the Holding Company). The Holding Company was
formed specifically for the purpose of having the Bank merged into it. At the
time of the merger, the Holding Company had assets of $128,000 and a net worth
of ($55,000). The Holding Company is now a one bank holding company with no
other subsidiaries than the Bank. Therefore, there are no significant
adjustments from the financial information of the Bank to the consolidated
financial information for the Holding Company. In October, 2003, the company
entered into an agreement to purchase Trust Company of Florida, an independent
trust company operating in Venice and Leesburg, Florida. The Trust Company
will add approximately $80,000,000 to the trust assets of the bank increasing
the Banks trust assets by approximately 90%. The transaction is not expected
to have any immediate impact on the earnings of the Holding Company.

The following discussion and analysis is based on the Holding Companys
financial condition and results of operations for the period from January 1,
2003 through September 30, 2003. This discussion and analysis should be read in
conjunction with the financial statement summaries of the Holding Company,
included elsewhere in this quarterly report.

Results of Operations.

Earnings in the first three quarters of 2003 were down $172,000 or $.10
per share when compared to earnings in the same period last year This is a 9%
decrease in year to date earnings. Third quarter earnings were down $130,000
over last year or $.08 per share. This is a 21% decrease in third quarter
earnings. The decreased earnings are a direct result of increased salary
expense without a corresponding increase in net interest income. The increased
salary expense is directly related to expansion of the Banks lending staff to
grow the loan portfolio. The bank expected the increase in staff to result in
higher loan growth this year. This did not occur due to falling interest rates
prompting higher than anticipated prepayments in the mortgage portfolio. This
was despite higher loan production than in prior years. The bank has seen the
prepayment phenomenon abate in

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the third quarter of 2003 and thus the increased staff is expected to
create the desired results in 2004. Year to date net interest income increased
by 1% or $70,000, while the third quarters increase was also 1% or $16,000.
Increased Other Operating Income was offset by increased other expenses. Thus,
the increased salary expense directly correlated to the lower earnings of the
Company. The Banks year to date contribution of $172,000 to loan loss reserve
was $63,000 lower than last year and softened the impact of the higher
salaries. The lower contribution to Loan Loss Reserve was the result of
decreased loan growth and decreased charge offs in the banks indirect
automobile lending. The bank ceased making indirect auto loans in June of 2001.

Net Interest Income. The major component of the Banks earning capacity is net
interest income, which represents the difference or spread between interest
income on earning assets and interest bearing liabilities, primarily deposits.
The spread is considered positive when rate-sensitive assets exceed
rate-sensitive liabilities, and negative when rate-sensitive liabilities exceed
rate sensitive assets. Net interest income is also affected by changes in
interest rates earned and paid, and by changes in the volume of
interest-earning assets and interest-bearing liabilities. To the extent
possible, the Bank follows a strategy intended to insulate the Banks interest
rate spread from adverse changes in interest rates by maintaining spreads
through the adjustability of its earning assets and interest-bearing
liabilities. On September 30, 2003, the Banks assets had a repriceability
over a three year period that closely matched its liability repriceability..

The Bank had good growth in its loan portfolio in the third quarter but
the average year to date outstandings are only modestly ahead of last year.
This combined with slightly decreasing interest margins has resulted in net
interest income approximately equal to 2002. Net interest income for nine
months in 2003 was $6,973,000 compared to $6,903,000 in 2002. For the third
quarter, net interest income was $2,327,000 compared to $2,311,000 last year.

Interest Earning Assets. Real estate related loans at September 30, 2003,
accounted for a majority of the banks loan portfolio. Most of the mortgages
are variable rate loans and are adjustable every one to five years. Thus,
volatile interest rates can result in the real estate loans lagging market
conditions. In the first half of 2000, rates were stable allowing the
portfolio to keep pace with market rates. In the second half of 2000, rates
began to fall and fell more dramatically later in the year and continued into
2001. This had a temporary negative impact on in the banks net interest
income until rates stabilized and the banks balance sheet repriced to the new
market rates. The banks interest margin was much improved in the last three
quarters of 2001 and has continued to improve over the first three quarters of
2002. In the last 4 quarters, margins have declined modestly.

The Banks investment portfolio is concentrated primarily in U.S.
Government agencies and corporations. About 24% of the Banks investment
portfolio re-prices in one year. Due to rising interest rates in the third
quarter, the Banks Available-for-Sale portfolio has a market value of about
$118,000 above book value.

Non-interest Earning Assets. Non-interest earning assets accounted for 8.5%
of total assets on September 30, 2003, and primarily consisted of cash and due
from banks, equipment and branches, deferred taxes, and accrued interest
receivable.

Funding Sources. The primary source of funds for the Banks lending and
investment activities is

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deposits. At September 30, 2003 the Banks total deposits were $193 million
plus $14 million in repurchase agreements. The Banks deposits are highly
concentrated in interest-bearing accounts, which is typical for the Banks
market area. The Bank has 17% of its deposits in NOW Accounts and 67% of its
deposits in Savings, MMAs and CD deposits. Despite the high concentration of
certificates of deposit, the Bank does not anticipate the maturity of such
certificates to affect the Banks liquidity, as management believes that the
high concentration was primarily due to customer relationships and not higher
than market rates. Over the last several years, the bank has been able to grow
without growing its deposits from certificates. The Bank is not in the practice
of paying above market rates on deposits.

Non-interest Income. The Banks non-interest income for the nine month period
ended September 30, 2003 was $1,456 including $663,000 from its Financial
Services and Trust Department. These are up 17% and 8% over last year. In the
third quarter total other income was up $41,000 or 10% and Trust and Financial
Services income was up $20,000 or 10%. Periodic security transactions generate
investment gains or losses and are primarily a result of tax management
considerations and liquidity requirements. The bank has had $86,000 in
security gains in 2003. The other significant items of non-interest income
represented service charges on deposit accounts, and merchant credit card
account income.

Non-interest Expense. The Banks non-interest expense for the nine month
period ended September 30, 2003 was $5,632,000 including $3,416,000 of salaries
and employee benefits. This are up 13% from last year. In the third quarter,
the banks other operating expenses were $1,905,000 and staff expenses were
$1,181,000, up 13% and 17% from the prior year. The Banks occupancy and
equipment expenses for the nine month period ended September 30, 2003 were
$904,000, up 7% from 2002 and the third period expense was $309,000, up 8% from
the prior year. This increase in expense is again directly attributable to the
banks opening of a loan production office in Sarasota and the corresponding
expansion of our lending staff.

Allowance for Credit Losses. The allowance for credit losses is established
through a provision for credit losses charged to expenses. Loans are charged
against the allowance for credit losses when management believes that the
collectability of the principal is unlikely. The allowance is an amount that
management believes will be adequate to absorb losses inherent in existing
loans and commitments to extend credit based on evaluations of the
collectability and prior loan loss experience of loans and commitments to
extend credit. The evaluations take into consideration such factors as changes
in the nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans, and current economic conditions that may
affect the borrowers ability to pay.

An allowance for loan loss expense of $172,000 was charged to operating
expenses for the nine month period ended September 30, 2003 including $108,000
that was charged in the third quarter of the year. The Bank had net charge
offs during these respective periods of $79,000 and $36,000. The balance of the
loan loss reserve expense was to cover the growth in the loan portfolio. At
September 30, 2003 the Bank has a total of $1,796,000 reserved for future loan
losses. This is up from $1,668,000 at September 30, 2002.

Loans on which the accrual of interest has been discontinued are
designated as non-accrual loans. Accrual of interest on loans is discontinued
either when reasonable doubt exists as to the full,

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timely collection of interest or when a loan becomes contractually past
due by 90 days or more with respect to interest or principal. When a loan is
placed on non-accrual status, all interest previously accrued but not collected
is reversed against current period interest income unless it is adequately
secured. Income on such loans is then recognized only to the extent that cash
is received and the future collection of principal is probable. Interest
accruals are resumed on such loans only when they are brought fully current
with respect to interest and principal and when in the judgment of management,
the loans are estimated to be fully collectible as to both principal and
interest. The bank had no loans at September 30, 2003. Where appropriate,
the Bank makes specific reserves for future losses on non-performing loans.
The Bank has set up no specific reserves on either of these loans.

The bank also had no other real estate owned at September 30, 2003.

Capital Resources. In the normal course of business, the capital position of
the Bank is reviewed by management and regulatory authorities. The Comptroller
of the Currency has specified guidelines for purposes of evaluating a banks
capital adequacy. Currently, banks must maintain a minimum primary capital
ratio of capital-to-assets of 4%. Primary capital includes the Banks
stockholders equity, subordinated debt, and the allowance for credit losses.
At September 30, 2003, the Banks primary capital ratio was 9.0%. In 1991, the
Comptroller began evaluating banks capital on a risk basis i.e. more capital
will be required for commercial loans than for residential real estate loan and
even less will be required for government bonds. The Comptroller will require
a minimum of an 8% capital ratio under this risk based method. Currently the
Bank has a risk based capital ratio of 12.8%

Liquidity. Management of the Bank continually evaluates its liquidity
position. Management believes that the Banks investment portfolio, when
combined with interest bearing bank balances and Fed Funds sold, provides
adequate liquidity to meet the Banks needs. As noted in Funding Sources
above, management believes that the high concentration of time deposits is
primarily due to customer relationships and not to higher-than-market rates
and, thus, do not present any unusual liquidity risk. In addition, the bank has
established borrowing lines with correspondent banks, and with the Federal Home
Loan Bank to cover liquidity needs.

Impact of Inflation and Changing Prices. Unlike most industrial companies,
virtually all of the Banks assets and liabilities are monetary in nature. As
a result, interest rates have a more significant impact on the Banks
performance than do the effects of inflation. Interest rates do not
necessarily move in the same direction or with the same magnitude as the prices
of goods and services, since such prices are affected by inflation. In the
current interest rate environment, liquidity and the maturity structure of a
financial institutions assets and liabilities are also critical to the
maintenance of acceptable performance levels.

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Quantitative and Qualitative Disclosure About Market Risk

The Bank periodically performs asset/liability analysis to assess the
Banks sensitivity to changing market conditions.

The primary functions of asset/liability management is to assure adequate
liquidity and maintain an appropriate balance between interest-sensitive
earning assets and interest-bearing liabilities. Liquidity management involves
the ability to meet the cash flow requirements of customers who may be either
depositors wanting to withdraw funds or borrowers needing assurance that
sufficient funds will be available to meet their credit needs. Interest rate
sensitivity management seeks to avoid fluctuating net interest margins and to
enhance consistent growth of net interest income through periods of changing
interest rates.

Marketable investment securities, particularly those of shorter
maturities, are a principal source of asset liquidity. Securities maturing or
expected to be called within one year or less amounted to $2,624,000 at
September 30, 2003 representing 6% of the investment securities portfolio.

Federal funds and lines of credit with other banks also provide the bank
with sources of funds for meeting its liquidity needs. At year-end, the bank
had lines of credit established with other banking institutions totaling
$36,000,000 of which $23,430,000 was unused and available.

Brokered deposits are deposit instruments, such as certificates of
deposit, bank investment contracts and certain municipal investment contracts
that are issued through brokers who then offer and/or sell these deposit
instruments to one or more investors. The Bank does not currently purchase or
sell brokered deposits.

Maturities of time certificates of deposit and other time deposits of
$100,000 or more,
outstanding at September 30, 2003, are summarized as follows:

|                         |  |                        |        | 
|------------------------ |  | ---------------------- | ------ | 
|                         |  | Time Deposits         
|                         |  |                       
|                         |  | (thousands of dollars)
|3 months or less         |  | $                      | 3,911  | 
|Over 3 through 12 months |  |                        | 13,209 | 
|Over 12 months           |  |                        | 2,119  | 
|                         |  |                        |        | 
|Total                    |  | $                      | 19,239 | 

Interest rate sensitivity varies with different types of interest earning
assets and interest-bearing liabilities. Overnight federal funds on which rates
change daily and loans which are tied to the prime rate differ considerably
from long-term investment securities and fixed-rate loans. Similarly, time
deposits over $100,000 and money market accounts are much more interest rate
sensitive than savings accounts. The shorter term interest rate sensitivities
are key to measuring the interest sensitivity gap, or excess interest-sensitive
earning assets over interest-bearing liabilities.

The following table shows the interest sensitivity gaps for four different
time intervals as of September 30, 2003. For the first year, interest-sensitive
assets exceed liabilities by $18,785,000. For the next two years, liabilities
reprice more rapidly than assets lowering the banks asset sensitive position

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to an essentially balanced position for the three year period. The excess
of interest-bearing liabilities over interest-earning assets for the
one-to-three year period is primarily related to the longer maturities of CDs
and NOW and MMA accounts that are regarded as much less rate sensitive.

|                               |  |                        |        |        |  |       |        |        |  |   |         |   |  |   |        | 
|------------------------------ |  | ---------------------- | ------ | ------ |  | ----- | ------ | ------ |  | - | ------- | - |  | - | ------ | 
|                               |  | As of
September 30    
|                               |  | (thousands of dollars)
|                               |  | 0-90                   |        | 91-365 |  | 1-3   |        | Over 3
|                               |  | Days                   |        | Days   |  | Years |        | Years 
|                               |  |                        |        |        |  |       |        |       
|Interest-sensitive assets      |  | $                      | 65,504 |        |  | $     | 54,517 |        |  | $ | 61,870  |   |  | $ | 42,014 | 
|Interest-sensitive liabilities |  |                        | 44,130 |        |  |       | 57,106 |        |  |   | 81,538  |   |  |   | 5,513  | 
|                               |  |                        |        |        |  |       |        |        |  |   |         |   |  |   |        | 
|Interest sensitivity gap       |  |                        | 21,374 |        |  |       | (2,589 | )      |  |   | (19,668 | ) |  |   | 36,501 | 
|Cumulative gap                 |  | $                      | 21,374 |        |  | $     | 18,785 |        |  | $ | (883    | ) |  | $ | 35,618 | 

The primary interest sensitive assets and liabilities in the one-year
maturity range are loans and time deposits. Trying to minimize this gap while
maintaining earnings is a continual challenge in a changing interest rate
environment and one of the objectives of the Banks asset/liability management
strategy.




Disclosure of Evaluation of Disclosure Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chairman and Chief Executive
Officer and President and Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chairman
and Chief Executive Officer and President and Chief Financial Officer concluded
that the Companys disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Companys periodic
SEC filings.

There were no significant changes made in the Companys internal controls
or in other factors that could significantly affect these internal controls
subsequent to the date of the evaluation performed by the Companys Chief
Executive Officer and Chief Financial Officer.

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Part II. Other Information




Item 1: Legal Proceedings Against
the Bank - None.




Item 2: Changes in Securities and
Use of Proceeds - None




Items 3: Defaults under Senior
Securities - None




Item 4: Submission of Matters to
a vote of Security Holders - None.




Item 5: Other Information - None




Item 6: Exhibits and Reports on Form 8-K

Exhibits



| | a) |  | Plan of acquisition, reorganization, arrangement,
liquidation, or succession.  On Oct 17, 2003 the company
entered into an agreement to acquire the Trust Company of
Florida, Inc. The agreement is part of the companys 8-k
filed with the SEC on October 17, 2003 and is made a part
hereto by reference.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Articles of incorporation and by-laws.                                                                                                                                                                                                                                                                       



| | 1) |  | A copy of the Amended and Restated
Articles of Incorporation of the Registrant is included
as Exhibit 3.A to the Registration Statement.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| | 2) |  | A copy of the Bylaws of the
Registrant is included as Exhibit 3.B to this
Registration Statement.                                       



| | c) |  | Instruments defining the rights of securities
holders, including indentures.
| | -- |  | ----------------------------------------------------------------------------
|
| |    |  | None                                                                        



| | d) |  | Published report regarding matters submitted to
vote of security holders.
| | -- |  | -------------------------------------------------------------------------
|
| |    |  | None                                                                     



| | 31.1 |  | CEO Certification pursuant to
section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- |  | ----------------------------------------------------------------------------
|
| | 31.2 |  | CFO Certification pursuant to
section 302 of the Sarbanes-Oxley Act of 2002.



| | 32.1 |  | Certification pursuant to 18 U.S.C. section 1350,
as enacted pursuant to section 906 of the Sarbanes-Oxley Act
of 2002.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------
|
| | 32.2 |  | Certification pursuant to 18 U.S.C. section 1350,
as enacted pursuant to section 906 of the Sarbanes-Oxley Act
of 2002.

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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 BANCSHARES, INC.
                    
(Registrant)
|                        |  |                                                                  
|Date: November 13, 2003 |  | By      /s/ Glen W. Fausset                                      
|                        |  | President and Chief Financial Officer                            

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