SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
(Mark One)

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

         or

         Transition Report under Section 13 or 15(d) of the Securities Exchange
------   Act of 1934
               For the transition period from          to
                                              --------    --------

                          Commission file no. 333-87503

                         First National Bancshares, Inc.
                 (Name of Small Business Issuer in Its Charter)

          South Carolina                                      58-2466370
       ---------------------                                  ----------
    (State or Other Jurisdiction                           (I.R.S. Employer
    of Incorporation or Organization)                      Identification No.)

             215 N. Pine St.
            Spartanburg, S.C.                                        29302
            -----------------                                      ---------
    (Address of Principal Executive Offices)                       (Zip Code)

                                  864-948-9001
                                  ------------
                 Issuer's Telephone Number, Including Area Code

        Securities registered pursuant to Section 12(b) of the Act: None.
    Securities registered pursuant to Section 12(g) of the Act: Common Stock.

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B in this form, and no disclosure will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

     The issuer's  revenues (total interest income plus noninterest  income) for
its most recent fiscal year were $6,853,173.  As of February 28, 2003, 1,201,900
shares of Common Stock were issued and outstanding.

     The  aggregate  market  value of the Common  Stock  held by  non-affiliates
(shareholders  holding less than 5% of an outstanding class of stock,  excluding
directors  and  executive  officers)  of the  Company on  February  28, 2003 was
$10,667,775.  This  calculation is computed by reference to the closing price of
our common stock as reported on the OTC  Electronic  Bulletin  Board on February
28,  2003,  of $15.00 per share,  which was the price of the last trade of which
management is aware prior to this date.

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

                       DOCUMENTS INCORPORATED BY REFERENCE
Company's 2002 Annual Report                                     Part II
Company's Proxy Statement for the
 2003 Annual Shareholders Meeting                                Part III





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<PAGE>




Item 1.    Description of Business

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

     o   significant  increases  in  competitive  pressure  in the  banking  and
         financial services industries;

     o   changes in the interest rate environment which could reduce anticipated
         or actual margins;

     o   changes  in  political  conditions  or the  legislative  or  regulatory
         environment;

     o   general  economic  conditions,  either  nationally  or  regionally  and
         especially  in primary  service  area,  becoming  less  favorable  than
         expected  resulting in, among other things,  a deterioration  in credit
         quality;

     o   changes occurring in business conditions and inflation;

     o   changes in technology;

     o   changes in monetary and tax policies;

     o   the level of allowance for loan loss;

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

     o   the rates of loan growth;

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

     o   changes in the securities markets; and

     o   other risks and uncertainties detailed from time to time in our filings
         with the Securities and Exchange Commission.

General

     First National Bancshares,  Inc. was incorporated on July 14, 1999 in South
Carolina for the purpose of operating as a bank holding company  pursuant to the
Federal Bank  Holding  Company Act of 1956 and the South  Carolina  Bank Holding
Company Act, and to purchase 100% of the issued and  outstanding  stock of First
National Bank of  Spartanburg,  an association  organized  under the laws of the
United  States,  to conduct a general  banking  business in  Spartanburg,  South
Carolina.

     On November  10,  1999,  we  commenced  our  initial  public  offering  and
completed  the sale of 1,200,000  shares of our common stock at $10 per share on
February 10, 2000. The offering  raised  approximately  $11,800,000 net of sales
expenses and commissions. Our directors and executive officers purchased 484,100
shares  of  common  stock  at $10 per  share,  for a total of  $4,841,000.  Upon
purchase of these shares, we issued stock warrants to the organizers to purchase
an additional  313,333  shares of common stock for $10 per share.  The warrants,
which are  represented  by separate  warrant  agreements,  vest  ratably  over a
five-year period beginning on February 10, 2001 and will be exercisable in whole
or in part during the ten-year period following the grant date.



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<PAGE>

     We used $11 million of the proceeds to capitalize the bank which opened for
business on March 27,  2000 in a temporary  location at 451 E. St. John St. that
was also the  headquarters  of the holding  company.  The bank opened its second
full-service  banking  office at 2680  Reidville Road in Spartanburg on July 14,
2000 and opened its third  full-service  office at 3090 Boiling  Springs Road in
Boiling  Springs  on August 24,  2001.  We  completed  the  construction  of our
permanent  main  office at 215 N. Pine St.  and  moved  our  headquarters  and a
full-service banking office to this location on February 5, 2001.

Marketing Focus

     The bank  has  positioned  itself  as a  locally-owned  and  operated  bank
organized to serve consumers and small-to  mid-size  businesses and professional
concerns.  Because  there are few locally  owned banks left in  Spartanburg,  we
believe  we offer a unique  banking  alternative  for the  market by  offering a
higher level of customer service and a management team more focused on the needs
of the community than most of our competitors.  In order to achieve the level of
prompt,  responsive  service  that we  believe  will  be  necessary  to  attract
customers and to develop First National Bank of  Spartanburg's  image as a local
bank with an individual focus, we are actively leveraging our community-oriented
board of directors, convenient branch locations, and local services and decision
making to attract and retain customers.

Banking Services

     The bank is primarily  engaged in the business of accepting demand and time
deposits and providing  commercial,  consumer and mortgage  loans to the general
public.  Deposits of the bank are insured up to $100,000 by the Federal  Deposit
Insurance  Corporation  ("FDIC").  Other  services which the bank offers include
safe deposit boxes, bank official checks,  traveler's  checks, and wire transfer
capabilities.  The bank  activated its website and its remote  internet  banking
product,   First  National  Online,  on  February  20,  2001  and  launched  its
internet-based commercial cash management product in October of 2001.

Location and Service Area

     Spartanburg  County has a growing and dynamic economic  environment that we
believe  will  support the bank.  It is South  Carolina's  fourth most  populous
county with over 247,000 residents.  The county and surrounding area are home to
several  large  manufacturing  concerns,   including  BMW,  Springs  Industries,
Michelin Tire Company,  Advantica,  Milliken & Company, and Spartanburg Regional
Medical Center,  which support a stable business  foundation and a skilled labor
force.  The presence of companies like these has resulted in Spartanburg  County
having the highest per capita international investment of any area in the United
States in 1995.

     Our primary  service area consists of Spartanburg  County,  South Carolina,
with a focus on the ten mile radius of our main office and our branch  office at
2680  Reidville  Road. Our main office is located at 215 N. Pine St. in downtown
Spartanburg and provides excellent visibility for the bank. We opened our second
branch office on the west side of  Spartanburg,  the fastest growing area of the
county on July 14, 2000 and we opened our third  branch  office at 3090  Boiling
Springs Road in northern  Spartanburg County on August 24, 2001. Our anticipated
expansion plans include opening additional branches strategically located within
our service  area to extend the market  reach of our bank while  increasing  our
personal service delivery capabilities to all of our customers.  We plan to take
advantage of existing contacts and relationships  with individuals and companies
in this area to more effectively market the services of the bank.

Deposit Services

     We offer a full range of deposit  services that are typically  available in
most banks and  savings  and loan  associations,  including  checking  accounts,
commercial  accounts,  savings  accounts,  and time  deposits of various  types,
ranging from daily money market accounts to longer-term certificates of deposit.
The  transaction  accounts  and time  certificates  are  tailored to our primary
market area at rates  competitive to those offered in the  Spartanburg  area. In
addition,  we offer  certain  retirement  account  services,  such as Individual
Retirement



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<PAGE>

Accounts  (IRAs).  We  solicit  these  accounts  from  individuals,  businesses,
associations, organizations, and governmental authorities.

Lending Activities

     General.  We emphasize a range of lending services,  including real estate,
commercial,  and  consumer  loans to  individuals  and  small-  to  medium-sized
businesses and  professional  firms that are located in or conduct a substantial
portion of their  business in the bank's  market  area.  We intend to  originate
quality,  profitable loans which will benefit the area's economy and promote the
growth of the  bank.  Management  has  focused  on  maintaining  a quality  loan
portfolio  and  accepting   only  those  credit  risks  which  meet  the  bank's
underwriting standards.

     Real Estate and Mortgage Loans.  One of the primary  components of our loan
portfolio is loans  secured by first or second  mortgages on real estate.  These
loans  generally  consist of  commercial  real estate  loans,  construction  and
development  loans,  and  residential  real estate loans,  including home equity
loans.  Interest rates for all  categories may be fixed or adjustable,  and will
more likely be fixed for shorter-term loans. Loan terms generally are limited to
five years or less, although payments may be structured on a longer amortization
basis. We generally charge an origination fee for each loan.

     Real estate loans are subject to the same general risks as other loans. The
principal  economic risk associated with each category of loans,  including real
estate  loans,  is  the  creditworthiness  of the  bank's  borrowers.  They  are
particularly  sensitive to  fluctuations  in the value of real estate,  which is
generally the  underlying  security for real estate loans.  Fluctuations  in the
value of real estate,  as well as other  factors  arising  after a loan has been
made,  could  negatively  affect a borrower's cash flow,  creditworthiness,  and
ability to repay the loan.  Management  attempts  to reduce  credit  risk in the
commercial real estate portfolio by emphasizing loans on  owner-occupied  office
and retail buildings where the loan-to-value  ratio,  established by independent
appraisals,  does not exceed 80%. In  addition,  we typically  require  personal
guarantees of the principal  owners of the property  backed with a review of the
personal financial statements of the principal owners.

     The  underwriting  criteria  for home  equity  loans and lines of credit is
generally the same as applied by the bank when making a first  mortgage loan, as
described  above,  and home equity lines of credit typically expire ten years or
less after origination.  The bank currently  originates  residential real estate
loans through a correspondent bank and is therefore not subject to interest rate
and credit risk on these loans.

     Commercial Loans. We make loans for commercial purposes in various lines of
businesses.  Commercial loans are generally considered to have greater risk than
first or second  mortgages on real estate  because they may be unsecured,  or if
they are secured,  the value of the security may be difficult to assess and more
likely to decrease than real estate.  Equipment  loans are typically  made for a
term of five  years or less at  fixed or  variable  rates,  with the loan  fully
amortized  over  the  term,  secured  by  the  financed  equipment  and  with  a
loan-to-value  ratio of 80% or less.  Working capital loans typically have terms
not  exceeding  one year and are  usually  secured  by  accounts  receivable  or
inventory, and/or personal guarantees of the principals of the business. We also
make small business loans utilizing  government  enhancements  such as the Small
Business  Administration's 7(a) program and SBA's 504 programs.  These loans are
typically partially  guaranteed by the government,  which may help to reduce our
risk. Government guarantees of SBA loans do not exceed 80% of the loan value and
will generally be less.

     As with other categories of loans,  the principal  economic risk associated
with  commercial  loans  is the  creditworthiness  of the  borrower.  The  risks
associated with commercial loans vary with many economic factors,  including the
economy  in the  Spartanburg  County  area.  The  well-established  banks in the
Spartanburg County area make proportionately more loans to medium to large-sized
businesses  than we do.  Many of our  commercial  loans  are made to  small-  to
medium-sized  businesses  which  may be  less  able  to  withstand  competitive,
economic, and financial conditions than larger borrowers.

     Consumer  Loans. We make a variety of loans to individuals for personal and
household  purposes,  including  secured  and  unsecured  installment  loans and
revolving  lines of credit.  Installment  loans typically carry



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<PAGE>

balances of less than  $50,000 and are  amortized  over periods up to 60 months.
Consumer loans may be offered on a single maturity basis where a specific source
of repayment is available.  Revolving loan products  typically  require  monthly
payments  of  interest  and a  portion  of the  principal.  Consumer  loans  are
generally considered to have greater risk than first or second mortgages on real
estate because they may be unsecured,  or if they are secured,  the value of the
security  may be  difficult  to assess  and more  likely to  decrease  than real
estate.  As  with  other  categories  of  loans,  the  principal  economic  risk
associated  with consumer  loans is the  creditworthiness  of the borrower.  The
principal competitors for consumer loans are the established banks and financial
services companies in the Spartanburg County area.

     Underwriting Procedures, Collateral and Risk. We use our established credit
policies and procedures when underwriting each type of loan.  Although there are
minor variances in the characteristics and criteria for each loan type which may
require  additional  underwriting  procedures,  we generally  evaluate borrowers
using the following defined criteria:

     o   Character - we  determine  that the borrower  has sound  character  and
         integrity by examining the borrower's history.

     o   Capital - we evaluate the borrower's  overall  financial  strength,  as
         well as the equity investment in the asset being financed.

     o   Collateral  - we determine  that the  collateral  is adequate  from the
         standpoint of quality, marketability, value and income potential.

     o   Capacity - we evaluate the borrower's ability to service the debt.

     o   Conditions  - we  underwrite  the  credit  in light of the  effects  of
         external factors, such as economic conditions and industry trends.

     It is our practice to obtain collateral for most loans to help mitigate the
risk associated with lending. We generally limit our loan-to-value ratio to 80%.
We obtain a security  interest in real estate for loans  secured by real estate,
including  construction and development  loans and other  commercial  loans. For
commercial  loans, we obtain  security  interests in equipment and other company
assets.  For consumer  loans used to purchase  vehicles,  we obtain  appropriate
title documentation. For secured loans that are not associated with real estate,
or  for  which  the  mortgaged  real  estate  does  not  provide  an  acceptable
loan-to-value  ratio,  we obtain other  available  collateral such as stocks and
bonds.

     Each type of loan carries a credit risk,  simply  defined as the  potential
that the  borrower  will not be  willing  or able to repay the debt.  While real
estate loans have various  risks common to all types of loans,  certain types of
real estate loans have specific risk  characteristics that vary according to the
collateral  type securing the loan and the terms and  repayment  sources for the
loan.  Real estate loans are sensitive to  fluctuations in the value of the real
estate  securing  the loan.  Certain  types of real  estate have  specific  risk
characteristics  that vary according to the type of collateral  that secures the
loan, the terms of the loan, and the repayment sources of the loan.

     Commercial real estate loans have risk that the primary source of repayment
will be  insufficient to service the debt.  Often,  this occurs as the result of
changes in local  economic  conditions  or in the industry in which the borrower
operates  which  impact  cash  flow  or  collateral   value.   Construction  and
development  real estate loans generally carry a higher degree of risk than long
term financing of existing  properties.  These projects are usually dependent on
the  completion of the project on schedule and within cost  estimates and on the
timely  sale of the  property.  Inferior or  improper  construction  techniques,
changes in economic conditions during the construction and marketing period, and
rising  interest  rates  which may slow the sale of the  property  are all risks
unique  to this  type of  loan.  Residential  mortgage  loans,  in  contrast  to
commercial real estate loans,  generally have longer terms and may have fixed or
adjustable interest rates.

     Consumer  loans,  other  than home  equity  loan  products,  are  generally
considered  to have more  risk than  loans to  individuals  secured  by first or
second  mortgages on real estate due to dependence on the borrower's  employment
status as the sole  source of  repayment.  Agricultural  loans carry the risk of
crop failure,  which adversely impacts both the borrower's  ability to repay the
loan and the value of the collateral.



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<PAGE>

     By following  defined  underwriting  criteria  noted above,  we can help to
reduce these risks. Additionally, we help to reduce the risk that the underlying
collateral  may not be  sufficient  to repay the  outstanding  balances by using
appraisals or taking other steps to determine  that the value of the  collateral
is adequate,  and lending  amounts  based upon lower  loan-to-value  ratios.  We
control  risks by limiting the  concentration  of our loan  portfolio in any one
type of loan. A  concentration  of credit report based upon SIC code is reviewed
on a quarterly basis by our Board of Directors.

     Loan Approval and Review.  Our loan approval  policies  provide for various
levels of officer  lending  authority.  When the amount of aggregate  loans to a
single borrower  exceeds an individual  officer's  lending  authority,  the loan
request is considered  and approved by an officer with a higher lending limit or
the directors' loan committee.  We do not make any loans to any of our directors
or executive  officers  unless the loan is approved by the board of directors of
the bank and is made on terms not more  favorable  to such  person than would be
available  to a person  not  affiliated  with the bank.  We  adhere  to  Federal
National  Mortgage  Association  and  Federal  Home  Loan  Mortgage  Corporation
guidelines in our residential  mortgage loan review  process,  but may choose to
alter this policy in the future. We currently originate our residential mortgage
loans through a correspondent bank.

     Lending Limits.  Our lending activities are subject to a variety of lending
limits  imposed by federal  law. In general,  we are subject to a legal limit on
loans to a single  borrower  equal to 15% of the bank's  capital and  unimpaired
surplus.  Different limits may apply in certain  circumstances based on the type
of loan or the nature of the borrower,  including the borrower's relationship to
the bank.  These  limits  increase  or  decrease  as our  capital  increases  or
decreases.

     Based upon the  initial  capitalization  of the bank with $11  million,  we
initially had a self-imposed loan limit of $1,320,000,  which represented 80% of
our initial  legal lending limit of  $1,650,000.  We actively  engage in selling
participations  in our loans to other  financial  institutions  in order to more
adequately meet all of the lending needs of loan customers  requiring  aggregate
extensions of credit above these limits. We compete for real estate loans with a
number of competitors which are  well-established in the Spartanburg County area
and have  substantially  greater  resources and lending limits.  As a result, we
occasionally must charge a lower interest rate to attract borrowers.

Other Banking Services

     We offer other banking  services  including  drive-up  ATM's,  safe deposit
boxes,  traveler's  checks,  direct deposit,  U.S. Savings Bonds, and banking by
telephone.  We activated  our website and First  National  Online,  our internet
banking  product,  on  February  20,  2001.  In  addition,   we  introduced  our
internet-based commercial cash management product in October of 2001.

     We are associated with the Cirrus and Pulse ATM networks, which may be used
by our customers  throughout  the country.  We also offer  merchant  banking and
credit card services through a correspondent bank.

     Although our bank does not have trust  powers,  we  implemented a strategic
alliance with Colonial  Trust Co. on August 15, 2002 to provide our consumer and
commercial  customers access to a wide variety of services  provided by Colonial
Trust  Co.  including  trust,  professional  portfolio  management,   individual
financial and retirement planning and corporate retirement planning services

Market Share

     As of June 30, 2002,  total deposits in our primary service area were $2.42
billion,  which  represented  a 3.2% deposit  growth rate from 2001.  Our market
share as of this date was 3.90%,  an  increase  of 58% over our market  share in
2001 of 2.47%. Our initial plans are to grow our deposit base to $200 million by
2005.  Of  course,  we cannot be sure  that  these  deposit  growth  rates  will
continue, or that we will accomplish this objective.




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<PAGE>

                           SUPERVISION AND REGULATION

     We are subject to extensive  state and federal banking laws and regulations
which impose specific  requirements or restrictions  on, and provide for general
regulatory oversight of, virtually all aspects of our operations. These laws and
regulations are generally intended to protect depositors, not shareholders.  The
following  summary is qualified by reference  to the  statutory  and  regulatory
provisions  discussed.  Changes in  applicable  laws or  regulations  may have a
material effect on our business and prospects. Our operations may be affected by
legislative  changes and the  policies  of various  regulatory  authorities.  We
cannot predict the effect that fiscal or monetary policies, economic control, or
new federal or state  legislation  may have on our  business and earnings in the
future.

USA Patriot Act of 2001

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

Gramm-Leach-Bliley Act

     On  November 4, 1999,  the U.S.  Senate and House of  Representatives  each
passed the  Gramm-Leach-Bliley  Act,  previously known as the Financial Services
Modernization  Act of 1999. The Act was signed into law by President  Clinton on
November 12, 1999. Among other things, the Act repeals the restrictions on banks
affiliating  with  securities  firms  contained  in  sections  20  and 32 of the
Glass-Steagall  Act. The Act also permits bank holding  companies to engage in a
statutorily  provided  list of financial  activities,  including  insurance  and
securities  underwriting and agency activities,  merchant banking, and insurance
company portfolio investment activities. The Act also authorizes activities that
are "complementary" to financial activities.

     The Act is intended, in part, to grant to community banks certain powers as
a matter of right that larger  institutions have accumulated on an ad hoc basis.
Nevertheless,  the  Act  may  have  the  result  of  increasing  the  amount  of
competition that we face from larger  institutions and other types of companies.
In fact, it is not possible to predict the full effect that the Act will have on
us. From time to time,  other changes are proposed to laws affecting the banking
industry,  and these  changes  could have a material  effect on our business and
prospects.

     The  Act  also  contains  provisions  regarding  consumer  privacy.   These
provisions   require  financial   institutions  to  disclose  their  policy  for
collecting  and protecting  confidential  information.  Customers  generally may
prevent financial  institutions from sharing personal financial information with
nonaffiliated   third   parties   except  for  third   parties  that  market  an
institution's own products and services.  Additionally,  financial  institutions
generally may not disclose consumer account numbers to any  nonaffiliated  third
party for use in telemarketing, direct mail marketing, or other marketing to the
consumer.

First National Bancshares, Inc.

     Because our holding  company,  First National  Bancshares,  Inc.,  owns the
outstanding  capital  stock of our bank,  our holding  company is a bank holding
company  under  the  federal  Bank  Holding  Company  Act of 1956 and the  South
Carolina Banking and Branching  Efficiency Act. Our activities are also governed
by the  Glass-Steagall  Act of 1933.  These  regulations  may be affected by the
changes enacted by the Gramm-Leach-Bliley Act.

     The Bank  Holding  Company  Act.  Under the Bank  Holding  Company Act, our
holding  company is subject to periodic  examination by the Federal  Reserve and
required  to  file  periodic  reports  of  its  operations  and



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<PAGE>

any additional  information that the Federal Reserve may require. Our activities
at the holding company level are limited to:

     o   banking and managing or controlling banks;

     o   furnishing services to or performing services for its subsidiaries; and

     o   engaging in other activities that the Federal Reserve  determines to be
         so closely  related to banking and managing or controlling  banks as to
         be a proper incident thereto.

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

     o   acquiring substantially all the assets of any bank;

     o   acquiring direct or indirect  ownership or control of any voting shares
         of any bank if after the  acquisition it would own or control more than
         5% of the  voting  shares  of such  bank  (unless  it  already  owns or
         controls the majority of such shares); or

     o   merging or consolidating with another bank holding company.

     In addition,  and subject to certain  exceptions,  the Bank Holding Company
Act and the Change in Bank Control Act require Federal Reserve approval prior to
any person or company acquiring "control" of a bank holding company.  Control is
conclusively  presumed to exist if an individual or company acquires 25% or more
of any  class  of  voting  securities  of a bank  holding  company.  Control  is
rebuttably  presumed to exist if a person  acquires  10% or more,  but less than
25%, of any class of voting  securities  and either the  company has  registered
securities  under Section 12 of the Securities  Exchange Act of 1934 or no other
person owns a greater percentage of that class of voting securities  immediately
after the  transaction.  Our common  stock is  registered  under the  Securities
Exchange Act of 1934. The  regulations  provide a procedure for challenge of the
rebuttable control presumption.

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

     o   making or servicing loans and certain types of leases;

     o   engaging in certain insurance and discount brokerage activities;

     o   performing certain data processing services;

     o   acting  in  certain  circumstances  as a  fiduciary  or  investment  or
         financial adviser;

     o   owning savings associations; and

     o   making  investments  in  certain   corporations  or  projects  designed
         primarily to promote community welfare.

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

     Source of Strength;  Cross-Guarantee.  In accordance  with Federal  Reserve
Board  policy,  our holding  company is expected to act as a source of financial
strength  to  the  bank  and  to  commit   resources  to  support  our  bank  in
circumstances  in which our holding company might not otherwise do so. Under the
Bank Holding


                                       8
<PAGE>

Company Act,  the Federal  Reserve  Board may require a bank holding  company to
terminate any activity or relinquish control of a nonbank subsidiary, other than
a nonbank  subsidiary of a bank, upon the Federal Reserve Board's  determination
that such  activity  or  control  constitutes  a serious  risk to the  financial
soundness or stability of any  subsidiary  depository  institution of the bank's
holding company.  Further,  federal bank regulatory  authorities have additional
discretion  to require a bank  holding  company to divest  itself of any bank or
nonbank  subsidiary  if the  agency  determines  that  divestiture  may  aid the
depository institution's financial condition.

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

First National Bank of Spartanburg

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

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

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

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

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



                                       9
<PAGE>

federal banking regulatory agencies to prescribe,  by regulation,  standards for
all insured depository institutions and depository institution holding companies
relating, among other things, to the following:

     o   internal controls;
     o   information systems and audit systems;
     o   loan documentation;
     o   credit underwriting;
     o   interest rate risk exposure; and
     o   asset quality.

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

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

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

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

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

     The Federal Reserve Board has recently issued  Regulation W, which codifies
prior  regulations  under  Sections  23A and 23B of the Federal  Reserve Act and
interpretative  guidance  with respect to affiliate  transactions.  Regulation W
incorporates the exemption from the affiliate  transaction rules but expands the
exemption  to cover the purchase of any type of loan or extension of credit from
an affiliate. In addition, under Regulation W:



                                       10
<PAGE>

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

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

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

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

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

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

     o   the federal Truth-In-Lending Act, governing disclosures of credit terms
         to consumer borrowers;
     o   the  Home  Mortgage   Disclosure  Act  of  1975,   requiring  financial
         institutions  to  provide  information  to enable the public and public
         officials to determine  whether a financial  institution  is fulfilling
         its  obligation  to help meet the  housing  needs of the  community  it
         serves;
     o   the Equal Credit  Opportunity Act,  prohibiting  discrimination  on the
         basis of race, creed or other prohibited factors in extending credit;
         of information to credit reporting agencies;


                                       11
<PAGE>

     o   the Fair Debt  Collection  Act,  governing the manner in which consumer
         debts may be collected by collection agencies; and
     o   the rules and regulations of the various federal  agencies charged with
         the responsibility of implementing such federal laws.

The deposit operations of the bank also are subject to:

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

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

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

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

     The FDIC Improvement Act established a new capital-based  regulatory scheme
designed to promote early  intervention  for troubled  banks which  requires the
FDIC  to  choose  the  least  expensive  resolution  of bank  failures.  The new
capital-based  regulatory  framework contains five categories of compliance with
regulatory  capital  requirements,  including  "well  capitalized,"  "adequately
capitalized,"   "undercapitalized,"    "significantly   undercapitalized,"   and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total  risk-based



                                       12
<PAGE>

capital  ratio of no less than 10%,  and the bank must not be under any order or
directive from the appropriate regulatory agency to meet and maintain a specific
capital level. As of December 31, 2002, we qualified as "well capitalized."

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

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

     These  capital  guidelines  can affect us in several  ways. If we grow at a
rapid pace, our capital may be depleted too quickly, and a capital infusion from
our holding  company  may be  necessary  which  could  impact our ability to pay
dividends.  Our capital levels  currently are adequate;  however,  rapid growth,
poor loan portfolio performance,  poor earnings performance, or a combination of
these factors could change our capital  position in a relatively short period of
time. If we fail to meet these capital requirements,  our bank would be required
to develop and file a plan with the Office of the  Comptroller  of the  Currency
describing  the  means  and  a  schedule  for  achieving  the  minimum   capital
requirements.  In  addition,  our bank would  generally  not receive  regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger  application,  unless  our bank could  demonstrate  a
reasonable plan to meet the capital  requirement  within a reasonable  period of
time. Bank holding companies  controlling  financial  institutions can be called
upon  to  boost  the  institutions'  capital  and  to  partially  guarantee  the
institutions' performance under their capital restoration plans.

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

     Effect of  Governmental  Monetary  Policies.  Our  earnings are affected by
domestic economic  conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had,  and are  likely  to  continue  to have,  an  important  impact on the
operating  results of commercial  banks through its power to implement  national
monetary  policy in order,  among other  things,  to curb  inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans,  investments and deposits through its open market
operations in United States government  securities and through its regulation of
the discount  rate on  borrowings  of member banks and the


                                       13
<PAGE>

reserve requirements against member bank deposits. It is not possible to predict
the nature or impact of future changes in monetary and fiscal policies.

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

Location and Service Area

     We conduct a general  commercial and retail banking  business,  emphasizing
the needs of individuals and small- to medium-sized  businesses.  We operate our
banking business through our bank, First National Bank of Spartanburg.  Our main
office is located at 215 N. Pine Street in Spartanburg,  South Carolina. We also
operate two additional branch offices in Spartanburg  County. We primarily serve
Spartanburg, South Carolina and the surrounding area.

Competition

     The  banking  business  is  highly  competitive.   We  compete  with  other
commercial banks, savings and loan associations,  credit unions and money market
mutual funds operating in the Spartanburg County area and elsewhere.  As of June
30, 2002, there were 17 depository institutions operating in Spartanburg County.
Some of these competitors have been in business for a long time and have already
established  their  customer  base and name  recognition.  We  believe  that our
community  bank  focus,  with our  emphasis  on  service  to  small  businesses,
individuals,  and  professional  concerns,  gives us an advantage in the market.
Nevertheless, a number of these competitors have greater financial and personnel
resources  than we may have.  Most of them offer  services such as extensive and
established  branch  networks  that we do not  currently  provide.  In addition,
competitors  that are not depository  institutions  are generally not subject to
the  extensive  regulations  that  apply  to our  bank.  As a  result  of  these
competitive  factors,  we may have to pay higher  rates of  interest  to attract
deposits.

Employees

     As of February 28, 2003, we had 40  employees,  of which 37 were full time.
These employees provide the majority of their services to our bank.

Item 2.    Description of Property
----------------------------------

     Since February 5, 2001, the principal place of business of both the company
and the bank has been located at 215 N. Pine Street, Spartanburg, South Carolina
29302,  one block  north of the  intersection  of Main Street and Pine Street in
downtown  Spartanburg.  We own the  approximately  2.0 acre site and the  15,000
square foot building with four  drive-through  banking stations and an automated
teller machine.  We had previously  operated our headquarters and a full-service
branch in a  temporary  facility  across  the  street  from our new main  office
facility at 451 E. St. John Street, Spartanburg,  South Carolina 29302 since the
bank opened for business on March 27, 2000.

     We opened a 3,000  square foot  branch  office on July 14, 2000 on the west
side of Spartanburg on a one-acre  outparcel of the Oak Grove Shopping Center at
2680 Reidville  Road,  Spartanburg,  South Carolina  29301.  The branch has four
drive-through  banking  stations and an automated  teller machine.  We have a 20
year  lease  on the land and  constructed  the  building  at this  location  for
approximately  $611,000.  Furniture,  fixtures and equipment for the branch cost
approximately $217,000.

     We opened a 3,000  square  foot  branch  office on August 25,  2001 at 3090
Boiling Springs Road in northern  Spartanburg  County in Boiling Springs,  South
Carolina 29316 on a plot of land which was purchased for approximately $370,000.
The facility was constructed at a cost of approximately $500,000. The branch has
four



                                       14
<PAGE>

drive-through  banking  stations and an  automated  teller  machine.  Furniture,
fixtures and equipment for the branch cost approximately $198,000.

     We intend to continue to follow our  strategy of growth and  expansion  and
may contract to open offices at  additional  sites in the next several  years of
operation.

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

     There are no material legal proceedings.

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

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

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

     Our stock trades under the symbol "FNSC" on the OTC Bulletin Board. Trading
and quotations of the common stock have been limited and sporadic. The ranges of
prices known to management at which shares of stock have been traded during 2002
are $10.75 to $15.25.  As of February 28, 2003,  there were 358  shareholders of
record.

     All of our  outstanding  shares of stock of common  stock are  entitled  to
share equally in dividends from funds legally available therefore,  when, as and
if declared by the board of directors. We currently intend to retain earnings to
support  operations and finance  expansion and  therefore,  we do not anticipate
paying cash dividends in the foreseeable future.

     The following is a summary of the bid prices for our common stock  reported
by the OTC Bulletin Board for the periods indicated:
<TABLE>
<CAPTION>
                                                    2002                           2001
                                             High            Low            High            Low
<S>                                       <C>            <C>             <C>            <C>
       First Quarter                      $ 13.00        $ 10.75         $ 10.75        $ 10.50
       Second Quarter                       14.00          11.00           10.875         10.00
       Third Quarter                        15.00          13.00           11.00          10.00
       Fourth Quarter                       15.25          14.00           12.00          10.25
</TABLE>

     The price listed above are quotations,  which reflect  inter-dealer prices,
without retail mark-up,  mark-down or commission,  and may not represent  actual
transactions.



                                       15
<PAGE>


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

<TABLE>
<CAPTION>
                      Equity Compensation Plan Information
                                                                                             Number of securities
                                                                                            remaining available for
                                   Number of securities                                      future issuance under
                                       to be issued               Weighted-average           equity compensation
                                     upon exercise of             exercise price of               plans (c)
                                   outstanding options,         outstanding options,          (excluding securities
Plan Category                     warrants and rights (a)      warrants and rights (b)      reflected in column (a))
-------------                     -------------------          -------------------          ------------------------

<S>                                       <C>                          <C>                          <C>
Equity compensation
plans approved by
security holders (1)                      105,000                      $10.20                       73,600

Equity compensation
plans not approved                        313,333                      $10.00                            -
by security holders (2)

         Total                            418,333                                                   73,600

<FN>
(1)  We have the  right to  increase  the  number  of  shares  of  common  stock
     available  under the 2000 First National  Bancshares,  Inc. Stock Incentive
     Plan each time we issue additional shares so that it continues to equal 15%
     of our total outstanding shares.

(2)  Each of our organizers  has received,  for no additional  consideration,  a
     warrant to  purchase  two  shares of common  stock for $10.00 per share for
     every three  shares  purchased  during our  initial  public  offering.  The
     warrants are represented by separate warrant  agreements.  One-fifth of the
     warrants vest on each of the first five  anniversaries of the completion of
     the offering,  and they are  exercisable in whole or in part during the ten
     year  period  following  that  date.  The  warrants  may  not be  assigned,
     transferred,  pledged,  or  hypothecated  in any  way.  The  shares  issued
     pursuant to the  exercise of such  warrants  are  transferable,  subject to
     compliance  with  applicable   securities   laws.  If  the  Office  of  the
     Comptroller of the Currency or the FDIC issues a capital directive or other
     order requiring the bank to obtain additional capital, the warrants will be
     forfeited if not immediately exercised.
</FN>
</TABLE>

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

     In response to this Item, the  information  contained on pages 3 through 14
of our Annual  Report to  Shareholders  for the year ended  December 31, 2002 is
incorporated herein by reference.

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

     In response to this Item, the information  contained on pages 15 through 38
of our Annual  Report to  Shareholders  for the year ended  December 31, 2002 is
incorporated herein by reference.

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

     On February 20, 2002, we dismissed the firm of Crisp Hughes Evans,  LLP and
proceeded to replace them with Elliott Davis,  LLC as our independent  auditors.
The decision to dismiss Crisp Hughes  Evans,  LLP was  recommended  by our audit
committee and authorized by our board of directors.



                                       16
<PAGE>

     The  reports  of  Crisp  Hughes  Evans,  LLP  on  the  Company's  financial
statements for the past three fiscal years did not contain an adverse opinion or
a disclaimer  of opinion and were not  qualified or modified as to  uncertainty,
audit scope, or accounting principles.

     In connection with the audits of the Company's financial statements for the
fiscal year ended  December 31,  2001,  December 31, 2000 and December 31, 1999,
and during any subsequent interim period preceding the dismissal of Crisp Hughes
Evans,  LLP,  there were no  disagreements  with Crisp Hughes Evans,  LLP on any
matters of accounting  principles or practices,  financial statement disclosure,
or auditing scope and procedures  which, if not resolved to the  satisfaction of
Crisp Hughes  Evans,  LLP,  would have caused Crisp  Hughes  Evans,  LLP to make
reference to the matter in their report.

     During the fiscal  years ended  December  31,  2001,  December 31, 2000 and
December  31, 1999,  and during any  subsequent  interim  period  preceding  the
dismissal of Crisp  Hughes  Evans,  LLP,  there were no  "reportable  events" to
describe as specified in Item 304(a)(1)(iv)(B) of Regulation S-B.

     We requested Crisp Hughes Evans,  LLP to furnish a letter  addressed to the
Commission  stating whether it agrees with the above statements.  A copy of that
letter,  dated February 22, 2002, is filed as Exhibit 16.1 to the Report on Form
8-K filed with the SEC on February 26, 2002.

     On February 21, 2002,  we engaged  Elliott  Davis,  LLC as our  independent
auditors for the fiscal year ended  December 31,  2002,  to audit the  Company's
financial  statements.  During the  Company's  most  recent  fiscal year and the
subsequent interim period preceding the engagement of Elliott Davis, LLC, we did
not consult Elliott Davis,  LLC on any matter  requiring  disclosure  under Item
304(a)(2) of Regulation S-B.

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

     In response to this Item, the information contained on page 13 of our Proxy
Statement for the Annual Meeting of Shareholders to be held on April 22, 2003 is
incorporated herein by reference.

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

     In response to this Item, the information contained on pages 8 through 9 of
our Proxy  Statement for the Annual Meeting of  Shareholders to be held on April
22, 2003 is  incorporated  herein by  reference.  In addition,  the  information
required by Item 201(d) is contained in Item 5 of this report.

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

     In response to this Item, the information contained on page 10 of our Proxy
Statement for the Annual Meeting of Shareholders to be held on April 22, 2003 is
incorporated herein by reference.

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

     In response to this Item, the information contained on page 12 of our Proxy
Statement for the Annual Meeting of Shareholders to be held on April 22, 2003 is
incorporated herein by reference.

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

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

3.1.  Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the
      Registration Statement on Form SB-2, File No. 333-70589).



                                       17
<PAGE>

3.2.  Bylaws  (incorporated  by  reference  to Exhibit  3.2 of the  Registration
      Statement on Form SB-2, File No. 333-70589).

4.1.  See Exhibits 3.1 and 3.2 for  provisions  in First  National  Bancshares's
      Articles of Incorporation and Bylaws defining the rights of holders of the
      common stock (incorporated by reference to Exhibit 4.1 of the Registration
      Statement on Form SB-2, File No. 333-70589).

4.2.  Form of certificate of common stock  (incorporated by reference to Exhibit
      4.2 of the Registration Statement on Form SB-2, File No. 333-70589).

10.1. Employment Agreement dated July 20, 1999 between First National Bancshares
      and Jerry  Calvert  (incorporated  by  reference  to  Exhibit  10.1 of the
      Registration Statement on Form SB-2, File No. 333-70589).

10.2. Form of Stock Warrant Agreement (incorporated by reference to Exhibit 10.2
      of the Registration Statement on Form SB-2, File No. 333-70589).

10.5  Lease  Agreement  dated July 12, 1999 between First  National  Bancshares,
      Inc. and Oak Grove  Associates,  LLC (incorporated by reference to Exhibit
      10.5 of the Registration Statement on Form SB-2, File No. 333-70589).

13    Company 2002 Annual Report

21    Subsidiaries of the Company

The exhibits  listed above will be furnished to any security holder upon written
request  to  Ms.  Kitty  B.  Payne,  Chief  Financial  Officer,  First  National
Bancshares,  Inc., Post Office Box 3508, Spartanburg,  South Carolina 29304. The
Registrant will charge a fee of $.25 per page for photocopying such exhibit.

(b)  Reports on Form 8-K

     We  filed a Form 8-K on  November  13,  2002 to  disclose  that  the  Chief
Executive Officer,  Jerry L. Calvert, and the Chief Financial Officer,  Kitty B.
Payne,  each  furnished  to the SEC the  certification  required  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002.

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

     Within  90 days  prior  to the  date  of this  report,  we  carried  out an
evaluation,  under the supervision and with the  participation  of our principal
executive officer and principal  financial officer,  of the effectiveness of the
design and operation of our disclosure  controls and  procedures.  Based on this
evaluation,  our principal  executive  officer and principal  financial  officer
concluded  that our  disclosure  controls and procedures are effective in timely
alerting  them to material  information  required to be included in our periodic
SEC reports.  The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future conditions, regardless of how remote.

     In  addition,  we reviewed our  internal  controls,  and there have been no
significant  changes in our  internal  controls or in other  factors  that could
significantly  affect  those  controls  subsequent  to the  date of  their  last
evaluation.



                                       18
<PAGE>


                                   SIGNATURES

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

                                    FIRST NATIONAL BANCSHARES, INC.

Date:   March 28, 2003              By:      /s/ Jerry L. Calvert
       --------------------            --------------------------------------
                                       Jerry L. Calvert
                                       President and Chief Executive Officer

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

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration Statement has been signed by the following in the capacities and on
the dates indicated.

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

/s/ C. Dan Adams                  Director                      March 28, 2003
-----------------------------
C. Dan Adams


/s/ Mellnee G. Buchheit           Director                      March 28, 2003
-----------------------------
Mellnee G. Buchheit


/s/ Jerry L. Calvert              Director,                     March 28, 2003
-----------------------------
Jerry L. Calvert                  President,
                                  Chief Executive Officer


/s/ Martha Cloud Chapman          Director                      March 28, 2003
-----------------------------
Martha Cloud Chapman


/s/ W. Russel Floyd, Jr.          Director                      March 28, 2003
-----------------------------
W. Russel Floyd, Jr.


/s/ C. Tyrone Gilmore, Sr.        Director                      March 28, 2003
-----------------------------
C. Tyrone Gilmore, Sr.




                                       19
<PAGE>


/s/ Gaines W. Hammond, Jr., MD    Director                      March 28, 2003
-----------------------------
Gaines W. Hammond, Jr., M.D.


/s/ Benjamin R. Hines             Director                      March 28, 2003
-----------------------------
Benjamin R. Hines


/s/ William A. Hudson             Director                      March 28, 2003
-----------------------------
William A. Hudson


/s/ Kitty B. Payne                Chief Financial Officer,      March 28, 2003
-----------------------------
Kitty B. Payne                    Principal Financial and
                                  Accounting Officer


/s/ Norman F. Pulliam             Director, Chairman            March 28, 2003
-----------------------------
Norman F. Pulliam                 of the Board


/s/ Peter E. Weisman              Director                      March 28, 2003
-----------------------------
Peter E. Weisman


/s/ Donald B. Wildman             Director                      March 28, 2003
-----------------------------
Donald B. Wildman


/s/ Coleman L. Young, Jr.         Director                      March 28, 2003
-----------------------------
Coleman L. Young, Jr.




                                       20
<PAGE>



                                INDEX TO EXHIBITS
Exhibit
Number                     Description
------                     -----------

3.1. Articles of Incorporation  (incorporated by reference to Exhibit 3.1 of the
     Registration Statement on Form SB-2, File No. 333-70589).

3.2. Bylaws  (incorporated  by  reference  to  Exhibit  3.2 of the  Registration
     Statement on Form SB-2, File No. 333-70589).

4.1. See  Exhibits 3.1 and 3.2 for  provisions  in First  National  Bancshares's
     Articles of Incorporation  and Bylaws defining the rights of holders of the
     common stock  (incorporated by reference to Exhibit 4.1 of the Registration
     Statement on Form SB-2, File No. 333-70589).

4.2. Form of certificate of common stock  (incorporated  by reference to Exhibit
     4.2 of the Registration Statement on Form SB-2, File No. 333-70589).

10.3.Employment  Agreement dated July 20, 1999 between First National Bancshares
     and  Jerry  Calvert  (incorporated  by  reference  to  Exhibit  10.1 of the
     Registration Statement on Form SB-2, File No. 333-70589).

10.4.Form of Stock Warrant Agreement  (incorporated by reference to Exhibit 10.2
     of the Registration Statement on Form SB-2, File No. 333-70589).

10.5 Lease Agreement dated July 12, 1999 between First National Bancshares, Inc.
     and Oak Grove Associates, LLC (incorporated by reference to Exhibit 10.5 of
     the Registration Statement on Form SB-2, File No. 333-70589).

13   Company 2002 Annual Report

21   Subsidiaries of the Company



                                       21
<PAGE>



                                  Certification

I, Jerry L. Calvert, certify that:

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

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officer 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 annual 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 annual report (the "Evaluation Date"); and

         c) presented in this annual 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 officer 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 officer and I have indicated in this annual
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: March 28, 2003

                                         /s/ Jerry L. Calvert
                                        -------------------------------
                                        Jerry L. Calvert
                                        President and Chief Executive Officer


                                       22
<PAGE>


                                  Certification

I, Kitty B. Payne, certify that:

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

2.  Based on my  knowledge,  this  annual  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 annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  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 annual report;

4.  The  registrant's  other  certifying  officer  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 annual 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 annual report (the "Evaluation Date"); and

         c)  presented  in  this  annual  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 officer 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 officer and I have indicated in this annual
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: March 28, 2003
                                         /s/ Kitty B. Payne
                                        --------------------------------
                                        Kitty B. Payne
                                        Chief Financial Officer




                                       23