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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 MARCH 31, 2003


FIRST NATIONAL BANCSHARES, INC.

(exact name of registrant as specified in its charter)


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

|                                             |            | 
|-------------------------------------------- | ---------- | 
|5817 Manatee Avenue West, Bradenton, Florida | 34209      | 
|(Address of principal office)                | (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 |  | 1,895,546 shares                 | 
|                                       |  |                                  | 
|(class)                                |  | Outstanding as of April 30, 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  
|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-99.1 CEO Certification    
|Ex-99.2 CFO Certification    



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##### Table of Contents



FIRST NATIONAL BANK OF MANATEE
Index to Form 10-Q
For the quarter Ended March 31, 2003

|                              |                                                                                               |                                                                                                              |    |      |   | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | -- | ---- | - | 
|                              |                                                                                               |                                                                                                              |    | Page
|PART I. FINANCIAL INFORMATION |                                                                                               |                                                                                                              |    |     
|                              | Item 1. Financial Statements                                                                  |                                                                                                              |    |      |  
|                              |                                                                                               | Condensed Consolidated Balance Sheets,
March 31, 2003 and December 31, 2002                                  |    |      | 1 | 
|                              |                                                                                               | Condensed Consolidated Statements
of Income for the three months ended
March 31, 2003 and 2002               |    |      | 3 | 
|                              |                                                                                               | Condensed Consolidated Statements of
Cash Flows for the three months ended
March 31, 2003 and March 31, 2002 |    |      | 4 | 
|                              | Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                                                                              |    | 6    |  
|                              | Item 3. Quantitative and Qualitative Disclosure About Market Risk                             |                                                                                                              |    | 10   |  
|                              | Item 4. Disclosure of Evaluation of Disclosure Controls and Procedures                        |                                                                                                              |    |      |  
|PART
II. OTHER INFORMATION.   |                                                                                               |                                                                                                              |    |     
|                              | Item 1. Legal Proceedings                                                                     |                                                                                                              |    | 12   |  
|                              | Item 2. Changes in Securities and Use of Proceeds                                             |                                                                                                              |    | 12   |  
|                              | Item 3. Defaults under Senior Securities                                                      |                                                                                                              |    | 12   |  
|                              | Item 4. Submission of Matters to a vote of Security Holders                                   |                                                                                                              |    | 12   |  
|                              | Item 5. Other Information.                                                                    |                                                                                                              |    | 12   |  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                              |    | 12   |  
|SIGNATURES                    |                                                                                               |                                                                                                              | 13 |     





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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




FIRST NATIONAL BANCSHARES, INC.
Consolidated Balance Sheet

Assets (000s)

|                                 |  |             |         |             |  |  |         |  
|-------------------------------- |  | ----------- | ------- | ----------- |  |  | ------- | -
|                                 |  | March 31    |         | December 31
|                                 |  | 2003        |         | 20021      
|                                 |  |             |         |            
|                                 |  | (unaudited) |         |             |  | 
|Cash and Due from Banks          |  |             | 6,601   |             |  |  | 7,995   |  
|Int. Bearing Bank Balances       |  |             | 15,717  |             |  |  | 5,454   |  
|Fed Funds Sold                   |  |             | 0       |             |  |  | 0       |  
|Investment Securities            |  |             | 34,153  |             |  |  | 40,817  |  
|Unrecognized Security Gains      |  |             | 860     |             |  |  | 963     |  
|Loans                            |  |             | 160,024 |             |  |  | 158,530 |  
|Less Allowance for Credit Losses |  |             | (1,730  | )           |  |  | (1,704  | )
|Deferred Loan Fees (earned)      |  |             | (286    | )           |  |  | (235    | )
|Premises and Equipment, Net      |  |             | 7,912   |             |  |  | 8,039   |  
|Accrued Interest Receivable      |  |             | 838     |             |  |  | 975     |  
|Deferred Income Tax Charges      |  |             | 104     |             |  |  | 0       |  
|Other R. E. & Assets Owned       |  |             | 18      |             |  |  | 16      |  
|Other Assets                     |  |             | 1,514   |             |  |  | 1,311   |  
|                                 |  |             |         |             |  |  |         |  
|Total Assets                     |  |             | 225,725 |             |  |  | 222,161 |  
|                                 |  |             |         |             |  |  |         |  

(1) Condensed from audited financial statements

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Liabilities and Stockholders Equity (000s)

|                                                                                                           |  |             |         |             |  |  |         | 
|---------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | ----------- |  |  | ------- | 
|                                                                                                           |  | March 31    |         | December 31
|                                                                                                           |  | 2003        |         | 20021      
|                                                                                                           |  |             |         |            
|                                                                                                           |  | (unaudited) |         |             |  | 
|Deposits                                                                                                   |  |             |         |             |  |  |         | 
|Demand, non-interest bearing                                                                               |  |             | 25,585  |             |  |  | 23,958  | 
|Demand, interest bearing                                                                                   |  |             | 32,784  |             |  |  | 31,735  | 
|Time (CDs, MMs, & Savings Accounts)                                                                      |  |             | 124,239 |             |  |  | 124,818 | 
|                                                                                                           |  |             |         |             |  |  |         | 
|TOTAL DEPOSITS                                                                                             |  |             | 182,608 |             |  |  | 180,511 | 
|Repurchase Agreements                                                                                      |  |             | 15,998  |             |  |  | 15,811  | 
|Accrued Interest Payable                                                                                   |  |             | 862     |             |  |  | 722     | 
|Accounts Payable and Other Liabilities                                                                     |  |             | 959     |             |  |  | 621     | 
|Fed Funds Purchased and Other Short Term
Borrowings                                                        |  |             | 4,500   |             |  |  | 4,500   | 
|                                                                                                           |  |             |         |             |  |  |         | 
|TOTAL LIABILITIES                                                                                          |  |             | 204,927 |             |  |  | 202,165 | 
|Stockholders Equity                                                                                       |  |             |         |             |  |  |         | 
|Common Stock, par value $.10 per share;
  Authorized 2,500,000 shares;
  Issued and Outstanding, 1,892,993 |  |             | 189     |             |  |  | 185     | 
|Capital Surplus                                                                                            |  |             | 14,127  |             |  |  | 13,888  | 
|Unrecognized Gains & Losses                                                                                |  |             | 537     |             |  |  | 601     | 
|Retained Earnings                                                                                          |  |             | 5,945   |             |  |  | 5,322   | 
|                                                                                                           |  |             |         |             |  |  |         | 
|Net Stockholders Equity                                                                                   |  |             | 20,798  |             |  |  | 19,996  | 
|Total Liabilities and Stockholders Equity                                                                 |  |             | 225,725 |             |  |  | 222,161 | 
|                                                                                                           |  |             |         |             |  |  |         | 

(1) Condensed from audited financial statements

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STATEMENT OF INCOME
Year to Date
($000s)

|                                         |               |                           |                        |                     |  |          |       |          |  |  |       | 
|---------------------------------------- | ------------- | ------------------------- | ---------------------- | ------------------- |  | -------- | ----- | -------- |  |  | ----- | 
|                                         |               |                           |                        |                     |  | March 31 |       | March 31
|                                         |               |                           |                        |                     |  | 2003     |       | 2002    
|                                         |               |                           |                        |                     |  |          |       |         
|                                         |               |                           |                        | Interest Income:    |  |          |       |          |  |  |       | 
|Interest Bearing Bank Balances           |               |                           | 36                     |                     |  |          | 29    |         
|Fed Funds Sold                           |               |                           | 0                      |                     |  |          | 0     |         
|Investment Securities:                   |               |                           |                        |                     |  |          |       |         
|Taxable                                  |               |                           | 298                    |                     |  |          | 411   |         
|Exempt from Federal Taxes                |               |                           | 92                     |                     |  |          | 93    |         
|                                         | Loan Interest |                           |                        | 2,631               |  |          |       | 2,665    | 
|                                         | Loan Fees     |                           |                        | 45                  |  |          |       | 29       | 
|Total Interest Income                    |               |                           | 3,102                  |                     |  |          | 3,227 |         
|Interest Expense                         |               |                           | 790                    |                     |  |          | 986   |         
|                                         |               |                           |                        | Net Interest Income |  |          | 2,312 |          |  |  | 2,241 | 
|Provision for Credit Losses              |               |                           | 46                     |                     |  |          | 100   |         
|Net Interest Income                      |               |                           | 2,266                  |                     |  |          | 2,141 |         
|After Provision for Credit Losses        |               |                           |                        |                     |  |          |       |         
|                                         |               |                           | Other Operating Income |                     |  |          |       |          |  |  |      
|Service Charges on Deposit Accounts      |               |                           | 123                    |                     |  |          | 116   |         
|Investment Security Gains                |               |                           | 54                     |                     |  |          | 0     |         
|Trust Fees & Investment Sales            |               |                           | 204                    |                     |  |          | 205   |         
|Other Income                             |               |                           | 120                    |                     |  |          | 86    |         
|Total Other Operating Income             |               |                           | 501                    |                     |  |          | 407   |         
|                                         |               | Other Operating Expenses: |                        |                     |  |          |       |          |  | 
|Salaries & Employee Benefits             |               |                           | 1,092                  |                     |  |          | 972   |         
|Occupancy & FF&E                         |               |                           | 286                    |                     |  |          | 277   |         
|Other Expenses                           |               |                           | 429                    |                     |  |          | 378   |         
|Total Other Operating Expenses           |               |                           | 1,807                  |                     |  |          | 1,627 |         
|Profit Before Tax                        |               |                           | 960                    |                     |  |          | 921   |         
|Estimated State and Federal Income Taxes |               |                           | 337                    |                     |  |          | 317   |         
|Profit After Tax                         |               |                           | 623                    |                     |  |          | 604   |         
|Earnings per Share                       |               |                           | 0.33                   |                     |  |          | 0.32  |         
|Earnings per Share fully diluted         |               |                           | 0.31                   |                     |  |          | 0.30  |         

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STATEMENTS OF CASH FLOWS
Year to Date
(000s)

|                                                                              |                                                                       |   |          |        |          |   |         |        |  
|----------------------------------------------------------------------------- | --------------------------------------------------------------------- | - | -------- | ------ | -------- | - | ------- | ------ | -
|                                                                              |                                                                       |   | March 31 |        | March 31
|                                                                              |                                                                       |   | 2003     |        | 2002    
|                                                                              |                                                                       |   |          |        |         
|Operating activities                                                          |                                                                       |   |          |        |          |   |         |       
|Net Income                                                                    |                                                                       |   | 623      |        |          |   | 603     |       
|Adjustments to reconcile net income to cash provided by operating activities: |                                                                       |   |          |        |          |   |         |       
|                                                                              | Allowance for loan losses (net of charge offs)                        |   |          | 26     |          |   |         | 81     |  
|                                                                              | Increase (decrease) in interest payable and other liabilities         |   |          | 478    |          |   |         | 28     |  
|                                                                              | Decrease (increase) in interest receivable and other assets           |   |          | (82    | )        |   |         | 1,039  |  
|                                                                              |                                                                       |   |          |        |          |   |         |       
|Net cash provided by operating activities                                     |                                                                       |   | 1,045    |        |          |   | 1,751   |       
|Investing activities                                                          |                                                                       |   |          |        |          |   |         |       
|                                                                              | Proceeds from sale and maturity of securities net of purchases        |   |          | 6,664  |          |   |         | (3,245 | )
|                                                                              | Loans originated, net of principal collections                        |   |          | (1,494 | )        |   |         | (4,382 | )
|                                                                              | Capital expenditures net of depreciation                              |   |          | 127    |          |   |         | (2,343 | )
|                                                                              | Proceeds from sale of other R. E. and assets owned                    |   |          | 0      |          |   |         | 330    |  
|                                                                              | Increase (decrease) in federal funds purchased                        |   |          | 0      |          |   |         | 0      |  
|                                                                              | Decrease (increase) in federal funds sold                             |   |          | 0      |          |   |         | 0      |  
|                                                                              |                                                                       |   |          |        |          |   |         |       
|                                                                              | Net cash provided (used) by investing activities                      |   |          | 5,297  |          |   |         | (9,640 | )
|Financing activities                                                          |                                                                       |   |          |        |          |   |         |       
|                                                                              | Net increase (decrease) in demand deposits                            |   |          | 1,627  |          |   |         | (552   | )
|                                                                              | Net increase (decrease) time deposits                                 |   |          | 470    |          |   |         | (7,447 | )
|                                                                              | Increase (decrease) in securities sold under agreements to repurchase |   |          | 187    |          |   |         | 2,698  |  
|                                                                              | Dividends paid                                                        |   |          | 0      |          |   |         | 0      |  
|                                                                              | Proceeds from issuance of common stock                                |   |          | 243    |          |   |         | 12     |  
|                                                                              | Retirement of common stock                                            |   |          | 0      |          |   |         | 0      |  
|                                                                              | Principal payments under capital lease obligation                     |   |          | 0      |          |   |         | 0      |  
|                                                                              |                                                                       |   |          |        |          |   |         |       
|                                                                              | Net cash (used) provided by financing activities                      |   |          | 2,527  |          |   |         | (5,289 | )
|Net increase in cash and due from banks                                       |                                                                       |   | 8,869    |        |          |   | (13,178 | )     
|Cash and due from banks at beginning of year                                  |                                                                       |   | 13,449   |        |          |   | 20,967  |       
|Cash and due from banks at end of quarter                                     |                                                                       | $ | 22,318   |        |          | $ | 7,789   |       
|                                                                              |                                                                       |   |          |        |          |   |         |       
|Schedule of non-cash investing activities                                     |                                                                       |   |          |        |          |   |         |       
|Loans transferred to other real estate owned                                  |                                                                       | $ | 0        |        |          | $ | 0       |       



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(2) 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 three month period ended March 31, 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.

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, the bank
opened its third branch on State Road 70 (8 miles southeast of the main
office). The Bank opened its latest Branch in Ellenton at the corner of US 301
and Old Tampa Road. 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.

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 March 31, 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 quarter of 2003 were up $19,000 or 3% compared to
earnings in the same period last year as direct result of net interest income
increasing 6% after loan loss provision while fee income increased 23% and
corresponding expenses grew only 10%. The major component of the increased
overhead was salary expense due to increased cost of benefits and added
personnel to support. The Banks contribution of $46,000 to loan loss reserve
was $54,000 lower than last year. Modest loan growth in the first quarter
abated the addition of contributions to loan loss reserve as high as last year.

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 March 31, 2003, the Banks

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loan portfolio had a high ratio of repriceability within one year.

Historically low interest rates have accelerated the number of loans
paying off to due to refinancing. As a result, the Bank has had only modest
growth in its loan portfolio despite strong loan activity. Consequently, the
increased net interest income has come from decreased cost of funds. Net
interest income for three months in 2003 was $2,312,000 compared to $2,241,000
in 2002.

Interest Earning Assets. Real estate related loans at March 31, 2003,
accounted for a majority of the banks loan portfolio. Most of the mortgages
are variable rate loans and are adjustable each one to five years. Thus,
volatile interest rates can result in the real estate loans lagging market
conditions. In 2000, rates were initially stable but began to fall in the
second half of the year and this drop in rates continued into early 2001.
However, in the second quarter of 2001, as rates began to stabilize, the Bank
was able to widen its margins throughout the remainder of the year. The Bank
benefited from this in 2002 and the first quarter of 2003.

The Banks investment portfolio is concentrated primarily in U.S.
Government agencies and corporations. The Banks Available-for-Sale portfolio
has a market value of about $860,000 above book value.

Non-interest Earning Assets. Non-interest earning assets accounted for 7.5%
of total assets on March 31, 2003, and primarily consisted of cash and due from
banks, branches and equipment, and accrued interest receivable.

Funding Sources. The primary source of funds for the Banks lending and
investment activities is deposits. At March 31, 2003 the Banks total deposits
were $182.6 million plus $16.0 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 18% of its deposits in NOW Accounts
and 68% of its deposits in Savings, MMAs and CD deposits. In 2001, the bank
was successful in shifting more deposits into NOW accounts and repurchase
agreements and out of certificates of deposit. This improvement in deposit mix
was sustained in 2002. This was a significant part of the banks improved net
interest margin over the last several years.

Non-interest Income. The Banks non-interest income for the three month period
ended March 31, 2003 was $501,000 including $204,000 from its Trust and
Financial Services area. Periodic security transactions generate investment
gains or losses and are primarily a result of tax management considerations and
liquidity requirements. The bank had security gains of $54,000 in the first
quarter of 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 three month
period ended March 31, 2003 was $1,807,000 including $1,092,000 of salaries and
employee benefits. The Banks occupancy and equipment expenses for the period
ended March 31, 2003 were $286,000. Non-interest expense was up from
$1,627,000 in 2002. The increase in expense is primarily due to expansion of
staff to sustain the banks growth going forward.

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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 $46,000 was charged to operating
expenses for the three month period ended March 31, 2003. The Bank had net
charge offs during this period of $20,000. The Bank has a total of $1,730,000
reserved for future loan losses.

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, 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 one
residential non-accrual loan for $61,000 at March 31, 2003. Where appropriate,
the Bank makes specific reserves for future losses on non-performing loans.
The Bank has no specific reserves established at March 31, 2003.

The bank also had no other real estate owned (OREO) at March 31,2003.

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 Tier I capital
ratio of capital-to-assets of 5% to be considered well capitalized. For 1st
National Bank & Trust, Tier I Capital includes only the Banks stockholders
equity. At March 31, 2003, the Banks Tier I Capital leverage ratio was
approximately 8.9%. 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 and 10% to be considered well capitalized. Currently
the Bank has a total risk based capital ratio in excess of 13.6 %.

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. Management believes that the
banks time deposits are concentrated in instruments that are 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

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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 following information is
extracted from the Banks 10-K which was filed with the Securities and Exchange
Commission (SEC) effective December 31, 2002.

The primary function 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 $13,227,000 at
December 31, 2002 representing 39% of the investment securities portfolio, an
increase from the 2001 amount of $3,200,000. This is due to the Bank making an
effort to shorten its average bond maturity while rates are low. Shortening
the maturity of the portfolio will have the effect of not locking in investment
rates while rates are low.

The Bank moderates its liquidity needs by maintaining short term borrowing
lines with several regional banks. At year-end, the Bank had lines of credit
established with other banking institutions totaling $36,375,000.

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 December 31, 2002, are summarized as follows:

|                          |  |                        |        | 
|------------------------- |  | ---------------------- | ------ | 
|                          |  | Time Deposits         
|                          |  |                       
|                          |  | (thousands of dollars)
|3 months or less          |  | $                      | 4,651  | 
|Over 3 through 12 months  |  |                        | 10,040 | 
|Over 12 through 36 months |  |                        | 6,581  | 
|Over 36 months            |  |                        | 984    | 
|                          |  |                        |        | 
|Total                     |  | $                      | 22,256 | 

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 passbook 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 December 31, 2002. For the first year, interest-sensitive
assets exceed liabilities by $26,319,000. Over the

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following two years, liabilities re-price faster than assets. 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 December 31      |        |        |  |  
|                               |  |      |        |        |  | (thousands of dollars) |        |        |  |  
|                               |  | 0-90 |        | 91-365 |  | 1-3                    |        | Over 3
|                               |  | Days |        | Days   |  | Years                  |        | Years 
|                               |  |      |        |        |  |                        |        |       
|Interest-sensitive assets      |  | $    | 57,902 |        |  | $                      | 55,888 |        |  | $ | 60,344  |   |  | $ | 30,335 | 
|Interest-sensitive liabilities |  |      | 41,564 |        |  |                        | 45,907 |        |  |   | 85,529  |   |  |   | 3,565  | 
|                               |  |      |        |        |  |                        |        |        |  |   |         |   |  |   |        | 
|Interest sensitivity gap       |  |      | 16,338 |        |  |                        | 9,981  |        |  |   | (25,185 | ) |  |   | 26,770 | 
|Cumulative gap                 |  | $    | 16,338 |        |  | $                      | 26,319 |        |  | $ | 1,134   |   |  | $ | 27,904 | 

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. Management has adopted a philosophy of balancing assets and
liabilities over a three-year period, which it has accomplished. Management
feels that the rate rewards of being balanced over a three-year period more
than offset the risk of being modestly unbalanced over the short term.

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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. - None                                                               
|     |  |                                                                                                                                                    
|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 the 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                                                                                                                                               
|     |  |                                                                                                                                                    
|99.1 |  | Certification pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the Sarbanes-Oxley Act of
2002.                            
|     |  |                                                                                                                                                    
|99.2 |  | 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: May 12, 2003 |  | By | /s/ | Glen W. Fausset
President and Chief Financial Officer

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CERTIFICATION

I, Francis I. duPont, III, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of First National Bancshares, Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.    The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;

b)    Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and

c)    Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5.    The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)    All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and

b)    Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and

6.    The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                    |  |  |  |                                                              
|------------------- |  |  |  | -------------------------------------------------------------
|Date:  May 12, 2003 |  |  |  | /s/ Francis I. duPont, III
Title: Principal Executive Officer

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CERTIFICATION

I, Glen W. Fausset, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of First National Bancshares, Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.    The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b)    Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and

c)    Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.    The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)    All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and

b)    Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and

6.    The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                    |  |  |  |                               
|------------------- |  |  |  | ------------------------------
|Date:  May 12, 2003 |  |  |  | /s/ Glen W. Fausset           
|                    |  |  |  | Title: Chief Financial Officer

15