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, 1999

         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.)

            451 E. St. John Street
               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: None.

         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 loss for its most recent  fiscal year was $212,946.  As of
February 10, 2000, 1,200,000 shares of Common Stock were issued and outstanding.

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Company on March 15, 2000 is $7,283,000.  This calculation is based upon
an estimate of the fair  market  value of the Common  Stock of $10.00 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
                                                                             --
<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        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 was  incorporated  to operate 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.

     Since our inception on July 14, 1999, as a South Carolina  corporation,  we
have engaged in organizational  and pre-opening  activities  necessary to obtain
regulatory  approvals  and to prepare our  subsidiary,  First  National  Bank of
Spartanburg,  to commence business as a financial institution.  We have received
preliminary  approval to open the bank and to obtain deposit  insurance from our
regulators. We plan to open the bank in March 2000.

     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
estimated sales expenses and commissions.  Our directors and executive  officers
purchased  471,700  shares  of  common  stock at $10 per  share,  for a total of
$4,717,000.  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.  We intend to use $11 million of the proceeds to capitalize  the proposed
bank.

                                       2

<PAGE>



Marketing Focus

      First National Bank of Spartanburg will position 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 can 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.  We believe
that this approach will be enthusiastically supported by the community. 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 intend to
leverage our community-oriented board of directors, convenient branch locations,
and local services and decision making to attract and retain customers.

Location and Service Area

     Spartanburg  County has a growing and dynamic economic  environment that we
believe will support First National Bank of Spartanburg.  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 will  consist of  Spartanburg  County,  South
Carolina, with a focus on the ten mile radius of our main office and our initial
branch office. Our main office will be located in downtown  Spartanburg and will
provide  excellent  visibility  for the bank.  We expect to open a branch on the
west side of  Spartanburg,  the fastest growing area of the county in the second
or third quarter of 2000. Our  anticipated  expansion  plans include opening two
additional branches  strategically  located within our service area in the third
and fifth years of operation. These branches will extend the market reach of our
bank, and they will increase 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.

Lending Activities

         General. We intend to emphasize a range of lending services,  including
real estate,  commercial,  and equity- line 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
will compete for these loans with  competitors  who are well  established in the
Spartanburg  County area and have greater  resources  and lending  limits.  As a
result, we may have to charge lower interest rates to attract borrowers.

         Loan  Approval  and Review.  The bank's  loan  approval  policies  will
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 will be considered and approved by an officer with a
higher lending limit or the officers' loan  committee.  The bank has established
an officers' loan committee that has lending limits,  and any loans in excess of
this lending limit will be approved by the directors' loan  committee.  The bank
will not make any loans to any director, officer, or employee of the bank 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 . The bank  currently  intends  to adhere  to  Federal
National  Mortgage  Association  and  Federal  Home  Loan  Mortgage  Corporation
guidelines  in its mortgage  loan review  process,  but may choose to alter this
policy in the future. The bank currently intends to originate its mortgage loans
through a correspondent bank.

         Lending  Limits.  The bank's  lending  activities  will be subject to a
variety of lending limits  imposed by federal law. In general,  the bank will be
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


                                       3
<PAGE>

loan or the nature of the borrower, including the borrower's relationship to the
bank. These limits will increase or decrease as the bank 's capital increases or
decreases.  Based upon the capitalization of the bank with $11 million, the bank
will initially have a self-imposed  loan limit of $1,270,000,  which  represents
80% of its  anticipated  legal lending limit of  $1,590,000.  Unless the bank is
able to sell  participations  in its loans to other financial  institutions,  it
will not be able to meet all of the lending  needs of loan  customers  requiring
aggregate extensions of credit above these limits.

         Real Estate and Mortgage Loans. We estimate that loans secured by first
or  second  mortgages  on  real  estate  will  make  up 50% of the  bank 's loan
portfolio.  These  loans  will  generally  fall  into  one  of  two  categories:
commercial real estate loans or  construction  and  development  loans.  Each of
these  categories is discussed in more detail below,  including  their  specific
risks.  Home  equity  loans are not  included  because  they are  classified  as
consumer loans, which are discussed below. Interest rates for all categories may
be fixed or adjustable,  and will more likely be fixed for  shorter-term  loans.
The bank will generally charge an origination fee for each loan.

         Real estate loans are subject to the same general risks as other loans.
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.

         We will have the  ability to  originate  real  estate  loans  through a
correspondent  bank.  Therefore,  we will not be  subject to  interest  rate and
credit risk on these loans.

o             Commercial  Real Estate Loans.  Commercial  real estate loans will
              generally have terms of five years or less,  although payments may
              be structured  on a longer  amortization  basis.  We will evaluate
              each borrower on an individual  basis and attempt to determine its
              business  risks and  credit  profile.  We will  attempt  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%. We will also  generally  require  that debtor cash
              flow  exceed 115% of monthly  debt  service  obligations.  We will
              typically review all of the personal  financial  statements of the
              principal  owners and require  their  personal  guarantees.  These
              reviews   generally  reveal  secondary   sources  of  payment  and
              liquidity to support a loan request.

o             Construction  and  Development  Real Estate  Loans.  We will offer
              adjustable and fixed rate residential and commercial  construction
              loans to builders  and  developers  and to  consumers  who wish to
              build their own home.  The term of  construction  and  development
              loans  will  generally  be limited to  eighteen  months,  although
              payments may be structured on a longer  amortization  basis.  Most
              loans will mature and require payment in full upon the sale of the
              property.  Construction  and  development  loans generally carry a
              higher  degree  of risk  than  long  term  financing  of  existing
              properties.  Repayment  depends on the ultimate  completion of the
              project and usually on the sale of the  property.  Specific  risks
              include:

                 o  cost overruns;
                 o  mismanaged construction;
                 o  inferior or improper construction  techniques;
                 o  economic changes or downturns during  construction;
                 o  a downturn in the real estate market;
                 o  rising  interest rates which may prevent sale of the
                    property; and
                 o  failure to sell completed projects in a timely manner.


         We will attempt to reduce risk by obtaining  personal  guarantees where
         possible,  and by  keeping  the  loan-to-value  ratio of the  completed
         project below specified percentages. We also may reduce risk by selling
         participations in larger loans to other institutions when possible.

                                       4
<PAGE>


o             Residential  Real Estate  Loans.  Residential  real  estate  loans
              generally  will have  longer  terms up to 30 years.  We will offer
              fixed and adjustable rate  mortgages.  We will have limited credit
              risk on these  loans as most  will be sold to third  parties  soon
              after closing.

         Commercial  Loans. The bank will 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.

         We  expect  to  offer  small   business  loans   utilizing   government
enhancements such as the Small Business  Administration's 7(a) program and SBA's
504  programs.  These  loans  will  typically  be  partially  guaranteed  by the
government,  which may help to reduce the bank s risk.  Government guarantees of
SBA loans will not exceed 80% of the loan value and will generally be less.

         The  well-established  banks in the  Spartanburg  County area will make
proportionately  more loans to medium to  large-sized  businesses  than we will.
Many of the bank's anticipated commercial loans likely will be made to small- to
medium-sized  businesses  which  may be  less  able  to  withstand  competitive,
economic, and financial conditions than larger borrowers.

         Consumer  Loans.  The bank will 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  will carry
balances of less than  $50,000 and be  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  will  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.

         We will also offer home equity loans. Our underwriting criteria for and
the risks  associated  with home equity loans and lines of credit will generally
be the same as those for first mortgage loans.  Home equity lines of credit will
typically  have terms of 15 years or less,  will  typically  carry balances less
than  $125,000,  and  may  extend  up to 100% of the  available  equity  of each
property.

Deposit Services

         We intend to 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 other time deposits of
various  types,   ranging  from  daily  money  market  accounts  to  longer-term
certificates of deposit.  The transaction accounts and time certificates will be
tailored to our primary market area at rates competitive to those offered in the
Spartanburg  area. In addition,  we intend to offer certain  retirement  account
services,  such as IRAs. We intend to solicit these  accounts from  individuals,
businesses, associations, organizations, and governmental authorities.


                                       5
<PAGE>


Other Banking Services

         We anticipate  that the bank will offer other bank  services  including
drive up ATMs,  safe deposit boxes,  traveler's  checks,  direct  deposit,  U.S.
Savings  Bonds,  and  banking  by  telephone.  We plan  for the  bank to  become
associated  with the  Cirrus  and Pulse ATM  networks,  which may be used by its
customers  throughout the country.  We believe that by being  associated  with a
shared  network of ATMs,  we will be better able to serve our customers and will
be able to attract  customers  who are  accustomed to the  convenience  of using
ATMs,  although we do not believe  that  maintaining  this  association  will be
critical to our success.  We intend to begin  offering  these  services  shortly
after  opening  the bank.  We do not expect the bank to  exercise  trust  powers
during its first year of operation.

Market Share

         As of June 30, 1999,  total deposits in the bank's primary service area
were $2.25 billion,  which represented a 4.4% deposit growth rate from 1998. Our
plan over the next five years is to grow our deposit  base to $150  million.  Of
course, we cannot be sure that these deposit growth rates will continue, or that
we will accomplish this objective.

Employees

         As of March 15,  2000,  the bank had no  employees  and the company had
twelve employees.

                           Supervision and Regulation

         Both the  company  and the bank 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  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.  Beginning  with the  enactment of the Financial  Institution  Report
Recovery and Enforcement Act in 1989 and following with the FDIC Improvement Act
in 1991,  numerous  additional  regulatory  requirements have been placed on the
National Banking industry in the past several years, and additional changes have
been proposed.  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.

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 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 National
Banking industry, and these changes could have a material effect on our business
and  prospects.  We cannot predict the nature or the extent of the effect on our
business and earnings of fiscal or monetary policies,  economic controls, or new
federal or state legislation.


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<PAGE>

First National Bancshares, Inc.

         Because  it will own the  outstanding  capital  stock of the bank,  the
company will be a bank holding  company  under the federal Bank Holding  Company
Act of 1956 and the South  Carolina  Banking and Branching  Efficiency  Act. Our
activities  will  also be  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, the
company is subject to periodic  examination by the Federal  Reserve and required
to file periodic  reports of its operations and any additional  information that
the Federal Reserve may require.  Our activities at the bank and 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
o        and managing or controlling banks as to be a proper incident thereto.

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

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

         In  addition,  and  subject to  certain  exceptions,  the Bank  Holding
Company  Act and the  Change in Bank  Control  Act,  together  with  regulations
thereunder,  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.  The
company's 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 its
capital  requirements

                                       7

<PAGE>

 and certain  other  restrictions,  the 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 the  company.  Our ability to pay
dividends  will be subject to regulatory  restrictions  as described  below in "
First  National Bank of  Spartanburg  - Dividends."  The company is also able to
raise capital for contribution to the 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,  the company is expected to act as a source of financial  strength
to the bank and to commit  resources  to support  the bank in  circumstances  in
which the company might not otherwise do so. Under the Bank Holding Company Act,
the Federal  Reserve  Board may require a bank holding  company to terminate any
activity or  relinquish  control of a nonbank  subsidiary,  other than a nonbank
subsidiary of a bank, upon the Federal Reserve Board's  determination  that such
activity or control  constitutes  a serious risk to the  financial  soundness or
stability  of  any  subsidiary  depository  institution  of the  bank's  holding
company. Further, federal bank regulatory authorities have additional discretion
to  require  a bank  holding  company  to divest  itself of any bank or  nonbank
subsidiary if the agency  determines  that  divestiture  may aid the  depository
institution's financial condition.

         Glass-Steagall Act. Subject to the enactment of the  Gramm-Leach-Bliley
Act, we are also restricted by the provisions of the  Glass-Steagall  Act, which
prohibits the company from owning  subsidiaries that are engaged  principally in
the issue, flotation,  underwriting, public sale, or distribution of securities.
The   interpretation,   scope,   and   application  of  the  provisions  of  the
Glass-Steagall Act currently are being considered and reviewed by regulators and
legislators,  and the  interpretation  and application of those  provisions have
been challenged in the federal courts.

         South Carolina State Regulation.  As a bank holding company  registered
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 banking or nonbanking  institutions or assets,
and we must file periodic  reports with respect to our  financial  condition and
operations,  management,  and intercompany relationships between the company and
its subsidiaries.

First National Bank of Sparatnburg

         The bank will operate 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 will be 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  will
regulate or monitor virtually all areas of the bank's operations, including:


                                       8
<PAGE>


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

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

o        internal controls;
o        information systems and audit systems;
o        loan documentation;
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  establishes  rates  for the  payment  of
premiums  by  federally  insured  banks and thrifts  for  deposit  insurance.  A
separate  Bank  Insurance  Fund  and  Savings  Association  Insurance  Fund  are
maintained for commercial banks and savings associations with insurance premiums
from the industry  used to offset losses from  insurance  payouts when banks and
thrifts  fail. In 1993,  the FDIC adopted a rule which  establishes a risk-based
deposit insurance premium system for all insured depository institutions.  Under
this system, until mid-1995 depository  institutions paid to Bank Insurance Fund
or Savings  Association  Insurance


                                       9
<PAGE>

Fund from $0.23 to $0.31 per $100 of insured  deposits  depending on its capital
levels and risk profile,  as determined  by its primary  federal  regulator on a
semiannual  basis.  Once the Bank  Insurance  Fund reached its legally  mandated
reserve ratio in mid-1995, the FDIC lowered premiums for well-capitalized banks,
eventually  eliminating  premiums  for  well-capitalized  banks,  with a minimum
semiannual  assessment of $1,000.  However, in 1996 Congress enacted the Deposit
Insurance Funds Act of 1996, which eliminated even this minimum  assessment.  It
also separated the Financial  Corporation  assessment to service the interest on
its bond obligations. The amount assessed on individual institutions,  including
Spartanburg First Bank , by Financial  Corporation  assessment is in addition to
the amount paid for deposit insurance  according to the risk-related  assessment
rate  schedule.  Increases  in  deposit  insurance  premiums  or changes in risk
classification  will increase the bank 's cost of funds,  and we may not be able
to pass these costs on to our customers.

         Transactions With Affiliates and Insiders.  The bank will be 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.

         The bank will also be 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 will be 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.

         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  has  recently  been  passed  which  permits
interstate  branching.  The new law permits  out-of-state  acquisitions  by bank
holding  companies,  interstate  branching by banks if allowed by state law, and
interstate merging by banks.

         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 the bank.


                                       10
<PAGE>


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

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

The deposit operations of the bank also are subject to:

o             the  Right to  Financial  Privacy  Act,  which  imposes  a duty to
              maintain   confidentiality   of  consumer  financial  records  and
              prescribes procedures for complying with administrative  subpoenas
              of financial records; and

o             the  Electronic  Funds Transfer Act and Regulation E issued by the
              Federal  Reserve  Board  to  implement  that  act,  which  governs
              automatic  deposits to and withdrawals  from deposit  accounts and
              customers'  rights  and  liabilities   arising  from  the  use  of
              automated teller machines and other electronic banking services.

         Capital  Regulations.  The federal  bank  regulatory  authorities  have
adopted  risk-based capital guidelines for banks and bank holding companies that
are  designed  to  make  regulatory  capital   requirements  more  sensitive  to
differences in risk profiles among banks and bank holding  companies and account
for  off-balance  sheet items.  The  guidelines  are  minimums,  and the federal
regulators  have  noted  that  banks and bank  holding  companies  contemplating
significant  expansion  programs  should not allow  expansion to diminish  their
capital ratios and should maintain ratios in excess of the minimums. We have not
received any notice indicating that either the company 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

                                       11

<PAGE>

a bank  holding  company  may  leverage  its equity  capital  base.  The minimum
required leverage ratio for top-rated  institutions is 3%, but most institutions
are  required  to maintain  an  additional  cushion of at least 100 to 200 basis
points.

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

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

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

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.

         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
the holding  company  may be  necessary  which  could  impact our ability to pay
dividends.  Our capital levels will  initially be more than  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.

         Failure to meet these capital requirements would mean that a bank would
be  required  to  develop  and file a plan  with  its  primary  federal  banking
regulator  describing the means and a schedule for achieving the minimum capital
requirements.  In addition,  such a 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  the bank could  demonstrate  a
reasonable plan to meet the capital  requirement  within a reasonable  period of
time.

         Enforcement  Powers.  The  Financial  Institution  Report  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

                                       12
<PAGE>

restitution,  reimbursement,  indemnification  or  guarantees  against  loss.  A
financial  institution  may also be ordered to restrict  its growth,  dispose of
certain  assets,  rescind  agreements  or  contracts,  or take other  actions as
determined by the ordering agency to be appropriate.

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

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

         Main Office - Our main  office  will be 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.  The site is approximately  2.0
acres in size and the building will be approximately 15,000 square feet. We have
purchased this site for approximately  $500,000 and construction of the building
is expected to cost an additional $1,750,000. We expect to complete construction
of our main in the  fourth  quarter  of 2000.  In the  interim  period,  we will
operate the bank in a temporary facility at 451 E. St. John Street, Spartanburg,
South  Carolina 29302 across the street from the site where our main office will
be constructed.

         Reidville Road Office - We also plan to open a 3,000 square foot branch
office on the west side of Spartanburg on a one-acre  outparcel of the Oak Grove
Shopping  Center at 2660 Reidville Road,  Spartanburg,  South Carolina 29301. We
have executed an agreement to lease the land for approximately $4,000 per month,
and we will  construct  the  branch  office on the  property  for  approximately
$500,000.  We expect to complete construction of our branch office in the second
or third quarter of 2000.

         We believe that these facilities will adequately serve the Bank's needs
for its first several years of operation.

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

         None.

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.
-------------------------------------------------------------------

         (a) We completed our initial  public  offering on February 10, 2000. We
are in the  process  of  arranging  to have our common  stock  quoted on the OTC
Bulletin Board under the symbol "FNBK." Our articles of incorporation  authorize
us to issue up to 10,000,000  shares of common stock, of which 1,200,000 shares,
for a total of  $12,000,000,  were sold in the initial  public  offering and are
outstanding as of March 15, 2000. We have 424  shareholders of record.  To date,
we have not paid cash  dividends on our common  stock.  We  currently  intend to
retain earnings to support operations and finance expansion and therefore do not
anticipate paying cash dividends in the foreseeable future.

         All  outstanding  shares of common stock of the company are entitled to
share equally in dividends from funds legally available,  when, and if, declared
by our Board of Directors.

                                       13

<PAGE>


         (b) Pursuant to Commission  Rule 463, we are obligated to report on the
use of proceeds from our initial public offering. The information provided below
is given as of December 31, 1999, except as updated to reflect the completion of
our initial public offering on February 10, 2000.

                  (1)      Our registration  statement on Form SB-2 (File No.
                           333-87503) was declared  effective by
                           the Commission on November 10, 1999.

                  (2)      The offering commenced on November 10, 1999.

                  (3)      The offering  closed on February 10, 2000 upon the
                           sale of 1,200,000  shares the company
                           had registered.

                  (4)      (i)      Our  officers  and  directors  sold most of
                                    our  shares in the  offering.  J.C.
                                    Bradford & Co. also served as our exclusive
                                    sales agent for the offering.

                           (ii)     Common stock was the only class of
                                    securities registered in the offering.

                           (iii)    We also registered  warrants for our common
                                    stock which we have granted to our
                                    organizers.

                           (iv)     1,600,000   shares  of  common   stock  were
                                    registered,  of which 1,200,000  shares were
                                    sold.   400,000  warrants  to  purchase  our
                                    common  stock for $10.00 per share were also
                                    registered in the offering.  Our  organizers
                                    purchased 470,000 shares in the offering. We
                                    granted our organizers  warrants to purchase
                                    a total of 313,333  shares of common  stock.
                                    An additional 400,000 shares were registered
                                    to  include  common  stock   underlying  the
                                    warrants  which  have  been  granted  to our
                                    organizers based on shares they purchased.

                           (v)      The company incurred  approximately $200,000
                                    in expenses (including sales commissions) in
                                    connection    with    the    issuance    and
                                    distribution  of  the  common  stock  in the
                                    offering.  All of these  expenses  were paid
                                    directly   or   indirectly   to  persons  or
                                    entities  other  than  directors,  officers,
                                    persons  owning 10% or more of the company's
                                    securities, or affiliates of the company.

                           (vi)     The  net  proceeds  to  the  company   after
                                    deducting the total expenses described above
                                    were approximately $11,800,000.

                           (vii)    Through  December  31,  1999,  100%  of  the
                                    $11,284,050  in offering  proceeds  received
                                    was   invested   in  cash   and   investment
                                    securities in  accordance  with the terms of
                                    the  escrow  agreement.   None  of  the  net
                                    proceeds   have   been  paid   directly   or
                                    indirectly to directors,  officers,  persons
                                    owning   10%  or  more   of  the   company's
                                    securities.   The  organizational   expenses
                                    incurred   through   December  31,  1999  of
                                    $246,023  were paid using  proceeds from the
                                    line of  credit.  When we open the bank,  we
                                    intend to capitalize it with $11 million.

                           (viii)   The use of proceeds described above does not
                                    represent a material  change from the use of
                                    proceeds disclosed in the prospectus for the
                                    offering.

                                       14

<PAGE>


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

Financial Condition

     First  National  Bancshares was organized on July 14, 1999, and its initial
principal  activities  have been  related to its  organization,  conducting  its
initial public offering,  and pursuing  regulatory  approvals from the Office of
the Comptroller of the Currency,  the FDIC, and the Federal Reserve Board. As of
February 10, 2000, we had received  subscriptions  for  1,200,000  shares of our
common  stock,  and we had received all  preliminary  regulatory  approvals.  We
closed our  initial  public  offering  on February  12,  2000,  and we expect to
receive final  regulatory  approvals in the first quarter of 2000, at which time
we will open the bank for business.

         At December 31, 1999,  First  National  Bancshares  had total assets of
$11,468,458.  These assets consisted principally of cash of $126,121; investment
securities of $11,197,367; deferred stock offering costs of $80,980 and premises
and  equipment of $41,720,  which  consisted  primarily of  improvements  to our
current main office.

         First  National  Bancshares'  liabilities  at  December  31,  1999 were
$11,681,304 and consisted of advances under a line of credit of $390,000;  stock
subscription  deposits of  $11,284,050;  and accounts  payable of $7,254.  First
National Bancshares had an organizers' deficit of $212,846 at December 31, 1999.

         First  National  Bancshares  had a net loss of $212,946 from  inception
through  December  31,  1999,  or a pro forma  net loss of $.18 per share  since
inception based on the 1,200,000  shares  outstanding as of March 15, 2000. This
loss resulted from expenses  incurred in connection with  activities  related to
the  organization  of First  National  Bancshares  and  First  National  Bank of
Spartanburg.  These  regulatory  activities  included  preparing  and  filing an
application  with the Office of the  Comptroller of the Currency and the FDIC to
charter First  National Bank of  Spartanburg  and to obtain  deposit  insurance,
preparing an  application  with the Federal  Reserve Board for approval of First
National  Bancshares to acquire all of the capital stock of First  National Bank
of Spartanburg, and responding to questions and providing additional information
to the Office of the  Comptroller  of the  Currency,  the FDIC,  and the Federal
Reserve Board in connection  with the  application  process.  We also prepared a
prospectus and filed a  registration  statement with the Securities and Exchange
Commission to sell First National  Bancshares'  common stock;  held meetings and
discussions among various organizers  regarding various preopening issues; hired
qualified  personnel to work for First National Bank of  Spartanburg;  conducted
public  relations  activities on behalf of First  National Bank of  Spartanburg;
developed  prospective  business contacts for First National Bank of Spartanburg
and First National Bancshares; and took other actions necessary for a successful
bank opening.  Because First National  Bancshares was in the organization stage,
we had no operations from which to generate revenues.

     For purposes of its charter  application with the Office of the Comptroller
of the Currency,  the organizers  estimated First National  Bancshares'  deficit
when First  National Bank of  Spartanburg  opens to be  approximately  $407,000,
although the actual  deficit may be  significantly  higher or lower.  We believe
that income from the operations of First  National Bank of  Spartanburg  will be
sufficient to fund our activities on an ongoing basis; however,  there can be no
assurance  that either First  National  Bank of  Spartanburg  or First  National
Bancshares will achieve any particular level of profitability.

                                       15

<PAGE>


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

                          INDEX TO FINANCIAL STATEMENTS



Independent Auditor's Report.............................................F-1

Balance Sheet............................................................F-2

Statement of Operations..................................................F-3

Statement of Changes in Organizers' Deficit..............................F-4

Statement of Cash Flows..................................................F-5

Notes to Financial Statement.......................................F-6 - F-9




                                      F-I




<PAGE>


                          Independent Auditors' Report

The Directors
First National Bancshares, Inc.
Spartanburg, South Carolina

We have audited the  accompanying  balance sheet of First  National  Bancshares,
Inc. (a development  stage  enterprise) as of December 31, 1999, and the related
statements of operations, changes in organizers' deficit, and cash flows for the
period from July 14, 1999 (date of inception)  through  December 31, 1999. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of First National Bancshares, Inc.
(a development stage enterprise) as of December 31, 1999, and the results of its
operations and its cash flows for the period from July 14, 1999 through December
31, 1999, in conformity with generally accepted accounting principles.

/s/ Crisp Hughes Evans, LLP

Spartanburg, South Carolina
January 25, 2000



                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                                  Balance Sheet

                                December 31, 1999

           Assets

<S>                                                               <C>
Cash and cash equivalents                                         $        126,121
Premises and equipment, net                                                 41,720
Deferred stock offering costs                                               80,980
Investment securities                                                   11,197,367
Prepaid expenses                                                            12,270
Other                                                                       10,000
                                                                   ---------------

         Total assets                                             $     11,468,458
                                                                   ===============

   Liabilities and Organizers' Equity

Liabilities:
   Line of credit                                                 $        390,000
   Stock subscription deposits                                          11,284,050
   Accounts payable                                                          7,254
                                                                   ---------------
         Total liabilities                                              11,681,304
                                                                   ---------------

Commitments and contingencies (Notes 6 and 7)

Organizers' deficit:
   Preferred stock, par value $.01 per share, 10,000,000 shares
      authorized, no shares issued or outstanding                                -
   Common stock, par value $.01 per share, 10,000,000 shares
     authorized, 10 shares issued and outstanding                                -
   Additional paid-in capital                                                  100
   Retained deficit accumulated during the development stage              (212,946)
                                                                   ---------------
         Total organizers' deficit                                        (212,846)
                                                                   ---------------

         Total liabilities and organizers' deficit                $     11,468,458
                                                                   ===============

</TABLE>



   The accompanying notes are an integral part of these financial statements.


                                      F-2

<PAGE>

                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                             Statement of Operations

              For the Period from July 14, 1999 (date of inception)
                            through December 31, 1999

Income:
   Interest income                                          $          33,077

Expenses:
   Salaries and employee benefits                                     112,731
   Professional fees                                                   85,588
   Insurance                                                            2,543
   Occupancy and equipment expense                                      6,151
   Telephone and supplies                                               6,749
   Application fees                                                    15,000
   Interest                                                             7,866
   Other                                                                9,395
                                                              ---------------
         Total expenses                                               246,023
                                                              ---------------

         Loss before provision for income taxes                      (212,946)

Provision for income taxes                                                  -
                                                              ---------------

         Net loss                                           $       (212,946)
                                                             ===============



   The accompanying notes are an integral part of these financial statements.



                                      F-3
<PAGE>

                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                   Statement of Changes in Organizers' Deficit

              For the Period from July 14, 1999 (date of inception)
                            through December 31, 1999
<TABLE>
<CAPTION>
                                                                                          Retained
                                                                                           Deficit
                                                                                         Accumulated
                                                                        Additional       During the
                                            Common Stock                 Paid-In         Development
                                      Shares            Amount           Capital            Stage            Total
                                   ------------     -------------    -------------      -------------     -----------

<S>                                <C>           <C>              <C>               <C>              <C>
Proceeds from the sale of stock
   to organizers                              10    $            -   $          100    $            -   $          100

Net loss                                       -                 -                -          (212,946)        (212,946)
                                   -------------     -------------    -------------     -------------    -------------

Balance, December 31, 1999                    10    $            -   $          100    $     (212,946)  $     (212,846)
                                   =============     =============    =============     =============    =============

</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-4

<PAGE>

                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                             Statement of Cash Flows

              For the Period from July 14, 1999 (date of inception)
                            through December 31, 1999

Net cash used for pre-operating activities:

   Net loss                                                  $        (212,946)
   Depreciation                                                            301
   Deferred stock offering costs                                       (80,980)
   Discount accretion                                                  (30,079)
   Prepaid expense                                                     (12,270)
   Accounts payable                                                      7,254
                                                               ---------------
         Net cash used for pre-operating activities                   (328,720)
                                                               ---------------

Investing activities:
   Purchase of premises and equipment                                  (42,021)
   Purchase of investment securities                               (11,167,288)
   Escrow deposits on land                                             (10,000)
                                                               ---------------
         Net cash used in investing activities                     (11,219,309)
                                                               ---------------

Financing activities:
   Proceeds from borrowings on line of credit                          390,000
   Proceeds from stock subscription proceeds                        11,284,050
   Loans from organizers                                                65,000
   Repayment of organizers' loans                                      (65,000)
   Proceeds from the sale of stock to organizers                           100
                                                               ---------------
         Net cash provided by financing activities                  11,674,150
                                                               ---------------

         Net increase in cash and cash equivalents                     126,121

Cash and cash equivalents, July 14, 1999 (date of inception)                 -
                                                               ---------------

Cash and cash equivalents, end of period                     $         126,121
                                                               ===============

Supplemental cash flow information:

   Cash paid for interest                                    $           7,606
                                                              ================





   The accompanying notes are an integral part of these financial statements.



                                      F-5
<PAGE>


                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          Notes to Financial Statements

                                December 31, 1999


1.   Summary of Significant Accounting Policies and Activities

     First National  Bancshares,  Inc. (the "Company") was  incorporated on July
     14, 1999 under the laws of the state of South  Carolina  for the purpose of
     operating  as a bank holding  company  pursuant to the federal Bank Holding
     Company Act of 1956, as amended,  and to purchase 100% of the capital stock
     of First National Bank of Spartanburg (in organization)  (the "Bank").  The
     Bank is being  organized  as a  national  bank under the laws of the United
     States with the purpose of becoming a new bank to be located in Spartanburg
     County, South Carolina. The group of organizers initiated several financial
     transactions  on behalf of the Company  prior to the date of  incorporation
     and as early as April 1, 1999 which have been  included in these  financial
     statements.

     The Bank's organizers have filed a joint application with the Office of the
     Comptroller of the Currency (the "OCC") and the Federal  Deposit  Insurance
     Corporation  (the  "FDIC")  to  charter  the  proposed  Bank  and for  FDIC
     insurance of the Bank's deposits. The Company has also filed an application
     with the  Federal  Reserve  Board  (the  "FRB")  to  become a bank  holding
     company.  The  Company  has  received  preliminary  approval  from the OCC.
     Provided  that the  remaining  applications  are  timely  approved  and the
     necessary  capital is raised,  it is expected that banking  operations will
     commence in the first or second quarter of 2000.

     The Company is a  development  stage  enterprise as defined by Statement of
     Financial   Accounting   Standard  No.  7,  "Accounting  and  Reporting  by
     Development Stage Enterprises," as it devotes substantially all its efforts
     to establishing a new business.  The Company's planned principal operations
     have not  commenced  and revenue has not been  recognized  from the planned
     principal operations.

     The Company has filed a  Registration  Statement  with the  Securities  and
     Exchange  Commission  on Form SB-2 to sell  1,200,000  shares of its common
     stock at $10 per share through a public  offering.  The offering will raise
     approximately  $11,763,000,  net of estimated  underwriting  discounts  and
     commissions and offering expenses.  The directors and executive officers of
     the Company  plan to  purchase  471,500  shares of common  stock at $10 per
     share,  for a total of  $4,715,000.  Upon  purchase  of these  shares,  the
     Company will issue stock  warrants to the  organizers  to purchase up to an
     additional  313,333 shares of common stock for $10 per share. The remaining
     shares  will be sold in the  public  offering.  The  Company  will  use $11
     million of the proceeds to capitalize the proposed bank.

     Year End - The Company  has  adopted a fiscal  year ending on December  31,
     effective for the period ending December 31, 1999.

     Estimates - The financial statements include estimates and assumptions that
     effect the  Company's  financial  position  and results of  operations  and
     disclosure  of  contingent  assets and  liabilities.  Actual  results could
     differ from these estimates.

     Cash and Cash Equivalents - For purposes of reporting cash flows,  cash and
     cash  equivalents  include  deposits with banks and restricted cash held in
     escrow for stock  subscriptions.  The amount of restricted cash at December
     31, 1999, was $119,760.  The Company places its temporary cash  investments
     with high credit quality financial institutions. At times, such investments
     may be in excess of the FDIC insurance limits.

                                      F-6

<PAGE>

                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          Notes to Financial Statements
                                   (Continued)

     Premises  and  Equipment - Premises and  equipment  are stated at cost less
     accumulated  depreciation  and  amortization,  computed  principally by the
     straight  line  method  over the  estimated  useful  lives  of the  assets.
     Maintenance and repairs are included in operating  expense,  while the cost
     of improvements is capitalized.

     Deferred  Stock  Offering  Costs - Deferred  stock offering costs have been
     incurred by the Company in connection with the offering and issuance of its
     stock.  The  deferred  stock  offering  costs  will be  deducted  from  the
     Company's additional paid-in capital after the stock offering. If the stock
     offering is deemed unsuccessful,  all deferred stock offering costs will be
     charged to  operations  during the period in which the  offering  is deemed
     unsuccessful.

     Organization  Costs - Organization costs include  incorporation,  legal and
     consulting fees incurred in connection with  establishing  the Company.  In
     accordance  with Statement of Position (SOP) 98-5,  "Reporting on the Costs
     of Start-Up Activities," organization costs are expensed when incurred.

     Investments  - Management  determines  the  appropriate  classification  of
     investment  securities at the time of purchase.  Management  has the intent
     and the Company has the ability at the time of purchase to hold  securities
     until  maturity.  Investment  securities are reported at cost (adjusted for
     amortization  of  premiums  and  accretion  of  discounts).   The  cost  of
     investment  securities  sold is determined  by the specific  identification
     method.

     Income   Taxes  -  Income  taxes  are  provided  for  the  tax  effects  of
     transactions  reported  in the  financial  statements  and consist of taxes
     currently due plus deferred taxes related primarily to differences  between
     the financial reporting and income tax bases of assets and liabilities.  At
     December 31, 1999, no taxable income has been generated and, therefore,  no
     tax provision has been included in these financial statements.

2.   Investment Securities

     Stock  subscription  deposits have been invested in short-term  securities.
     The  amortized  cost,  gross  unrealized  holding  losses and fair value of
     investment securities at December 31, 1999, consisted of the following:

                                                        Gross
                                      Amortized      Unrealized         Fair
                                        Cost           Losses           Value
                                      ----------     ----------         -----

   U.S. Government obligations    $       999,366    $    (2,491)   $    996,875
   U.S. Agency obligations             10,198,001        (22,329)     10,175,672
                                   --------------     ----------     -----------

                                  $    11,197,367    $   (24,820)   $ 11,172,547
                                   ==============     ==========     ===========


     All  investments  mature  within  30 days and are  restricted  by the stock
subscription escrow agreement.

3.   Line of Credit

     The  Company  has  established  a $500,000  line of credit with a financial
     institution  to  fund   operating   expenses  of  the  Company  during  the
     development stage. The line is uncollateralized and is guaranteed by the
     organizers.


                                      F-7
<PAGE>

                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          Notes to Financial Statements
                                   (Continued)

     The line bears interest at the prime rate minus 1/2% and expires June 2000.
     As of December 31, 1999, $390,000 was outstanding on this line of credit.

4.   Other Assets

     Included in other  assets are two (2) $5,000  escrow  deposits on
     locations  for the Bank's main office and a  branch office.

5.   Income Taxes

     The Company has no currently  taxable  income for the period from inception
     (July 14,  1999) to December 31,  1999.  The  following is a summary of the
     items which  caused  recorded  income  taxes to differ from taxes  computed
     using the statutory tax rate for the period from inception  (July 14, 1999)
     to December 31, 1999:

     Income tax benefit at federal statutory rate           $     (72,402)
     State income tax benefit, net                                 (7,027)
     Increase in valuation allowance                               79,429
                                                             ------------

     Income tax benefit                                     $           -
                                                             ============

     The  components  of the deferred  tax asset at December  31,  1999,  are as
     follows:

     Deferred tax liability:
       Accrual to cash adjustment                        $          (9,667)

     Deferred tax asset:
       Deferred organizational and start-up costs                   89,096
                                                          ----------------

       Deferred tax asset before valuation allowance                79,429

     Valuation allowance                                           (79,429)
                                                          ----------------

          Net deferred tax asset                         $               -
                                                          ================

     The Company has  recorded a valuation  allowance  equal to the net deferred
     tax  asset at  December  31,  1999,  as the  realization  of this  asset is
     dependent on the Company's ability to generate future taxable income during
     the periods in which temporary differences become deductible.


6.   Commitments and Contingencies

     The Company has entered into an employment agreement with its President and
     Chief  Executive  Officer  that  includes a three-year  compensation  term,
     annual  bonus,   incentive  program,  stock  option  plan  and  a  one-year
     non-compete agreement upon termination.


                                      F-8
<PAGE>


                         FIRST NATIONAL BANCSHARES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          Notes to Financial Statements
                                   (Continued)

     As the process of organization and selling its common stock progresses, the
     Company  will  execute  its plans to  acquire  land and  construct  banking
     facilities.  These future  commitments  will be dependent on the successful
     offering of its common stock as discussed in Note 1.

7.   Year 2000 Issue

     The Year  2000  issue  relates  to  limitations  in  computer  systems  and
     applications  that may prevent  proper  recognition  of the Year 2000.  The
     potential  effect of the Year 2000  issue on the  Company  may not be fully
     determinable until the Year 2000 and thereafter. If Year 2000 modifications
     are not properly completed either by the Company or entities with which the
     Company conducts business,  the Company's revenues and financial  condition
     could be adversely impacted.

8.   Subsequent Events

     On January 6, 2000, the Company received  approval from the Federal Reserve
     to become a bank  holding  company  through the  acquisition  of the Bank's
     stock.

     On January 14, 2000, the Company successfully  completed the initial public
     offering of 1,200,000  shares of its common stock. The $12,000,000 in funds
     received from investors are being held by the Company's  independent escrow
     agent,  The Bankers Bank.  The escrow agent will hold these funds until the
     Company receives all preliminary regulatory approvals to open the Bank.

     On January 14,  2000,  the Company  entered into a  twelve-month  operating
     lease requiring monthly payments of $2,000 for the temporary facility where
     it will  open for  banking  business.  The  Company  plans to  construct  a
     permanent building by the conclusion of the lease term.

     Subsequent to year end, the Bank received  approval of its  application for
     deposit  insurance  with the FDIC.  The  approval  is  subject  to  certain
     conditions that must be satisfied within a twelve-month period.


                                      F-9

<PAGE>



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

         None.

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

         The following sets forth certain  information  regarding First National
Bancshares' executive officers and directors as of March 15, 2000. The Company's
Articles of Incorporation provide for a classified Board of Directors,  so that,
as nearly as possible, one-third of the directors are elected each year to serve
three-year  terms.  The terms of office of the  classes of  directors  expire as
follows:  Class I at the 2000 annual  meeting of  shareholders,  Class II at the
2001 annual meeting of shareholders, and Class III at the 2002 annual meeting of
shareholders.  Executive  officers  serve  at the  discretion  of the  Board  of
Directors.

Name                           Age        Position
----                           ---        --------

C. Dan Adams                   39         Director
Mellnee G. Buchheit            51         Director
Jerry L. Calvert               51         Director, President, and
                                          Chief Executive Officer
Martha Cloud Chapman           76         Director
W. Russel Floyd, Jr.           49         Director
C. Tyrone Gilmore, Sr.         56         Director
Gaines W. Hammond, Jr., M.D.   50         Director
Benjamin R. Hines              43         Director
William A. Hudson              64         Director
Robert (Bob) W. Murdoch, Jr.   56         City Executive
Kitty B. Payne                 29         Chief Financial Officer and Secretary
Norman F. Pulliam              56         Director, Chairman of the Board
Peter E. Weisman               62         Director
Donald B. Wildman              50         Director
Coleman L. Young, Jr.          42         Director
David H. Zabriskie             38         Chief Lending Officer

         C. Dan Adams, Class III director,  has been the president and principal
owner of The Capital  Corporation of America,  Inc., a mortgage  banking company
located  in  Spartanburg,  since  1991.  He is also  president  and owner of The
Capital  Finance  Group,  Inc.,  a merger and  acquisitions  company  located in
Spartanburg.  From 1981 until 1991, he was an employee and vice president of C&S
National Bank. Mr. Adams maintains an active role in the business community with
ownership   interests  in  several  hotel,   assisted  living,   and  restaurant
businesses.  Mr.  Adams holds SEC Series 7 and SEC Series 63  licenses  from the
NASD and is a certified business intermediary.  He graduated from the University
of South  Carolina-Spartanburg in 1983 with a degree in business administration.
He is a graduate of The Banking School of the South (Louisiana State University,
1989) and is a Certified Commercial Investment member. He is an active member of
the First Baptist Church of Spartanburg.

         Mellnee  G.  Buchheit,  Class I  director,  has been the  president  of
Buchheit News Management, Inc., a firm specializing in media investments,  since
1993.  From  1980  until  1993,  Ms.  Buchheit  worked in the  public  relations
department for Mid-South  Management Company,  Inc., a media investment company.
She also serves as a director for Wayne  Printing Co.,  Inc. and Hometown  News,
Inc. Ms. Buchheit graduated from Winthrop  University with a degree in education
in 1969. Ms Buchheit  currently  serves on the board of trustees for Spartanburg
Day School,  Spartanburg Regional Medical Foundation,  and Spartanburg Methodist
College. Ms.

                                       16

<PAGE>

Buchheit is  presently a member of  Westminster  Presbyterian  Church,  the Lady
Slipper Garden Club, and the Junior League of Spartanburg (sustainer).

         Jerry L. Calvert,  Class I director,  is the proposed  chief  executive
officer and president of First National Bancshares,  Inc. and the First National
Bank of  Spartanburg  (proposed).  He has  over 25 years  of  experience  in the
financial  services  industry.  Mr.  Calvert was the senior vice  president  and
regional  manager for American  Federal Bank from 1984 until March 1999, when he
resigned to help  organize the First  National  Bank of  Spartanburg.  From 1977
until 1984,  he was vice  president  and city  executive for the Southern Bank &
Trust, located in Gaffney, South Carolina. From 1974 until 1977, Mr. Calvert was
a loan officer with First National Bank of South Carolina. Mr. Calvert graduated
from Wofford College in 1974 with a bachelor of arts degree in economics.  He is
also a graduate of The Bankers School of the South at Louisiana State University
and the National  Commercial  Lending School at the University of Oklahoma.  Mr.
Calvert  currently  serves on the board of  directors  of the  Spartanburg  Area
Chamber of  Commerce,  the Cities and Schools of  Spartanburg,  the  Spartanburg
Rotary Club,  and the  Spartanburg  Urban League,  and he serves on the board of
trustees for  Spartanburg  Methodist  College.  He was a former  chairman of the
board of the Cities and Schools and a former  director and chairman of the board
of the Big  Brothers/Sisters of Spartanburg.  He is a retired Lt. Colonel in the
U.S. Marine Reserves and a Vietnam veteran. Mr. Calvert was Rotarian of the Year
in 1998-1999,  and he has been elected  chairman of the board of the Spartanburg
Area Chamber of Commerce for the year 2000.

         Martha Cloud Chapman, Class III director, graduated from the University
of North  Carolina  -  Greensboro  in 1942  with a degree  in art.  Ms.  Chapman
previously  was  the  first  female  board  member  of  the  Spartanburg  County
Foundation,  the South Carolina Development Board, and the South Carolina Mining
Council and the chairman of Governor Jim Edward's Inaugural Ball. She was also a
past  board  member of the  Spartanburg  Music  Foundation,  the South  Carolina
Election  Commission,  South Carolina Health Coordinating  Commission,  Palmetto
Conservation Foundation,  and Spartanburg Methodist College and a past member of
Clemson  University's  board of visitors.  Ms. Chapman  currently  serves on the
board of directors  for Queens  College in  Charlotte,  North  Carolina,  the SC
School  Deaf & Blind  Foundation,  the  Charles  Lea  Foundation,  AWARE  (adult
literacy),  Mobile  Meals,  Ballet  Spartanburg,  and Converse  College  Alumnae
Associates.  Ms. Chapman is currently an elder of the First Presbyterian Church,
moderator elect of the  Presbyterian  Women, a sustainer of the Junior League of
Spartanburg, and a trustee of the YMCA foundation.

         W. Russel Floyd, Jr., Class I director, has been the president of W. R.
Floyd  Services,  Inc.,  a  funeral  home  and  cemetery  operation  located  in
Spartanburg,  since 1978, the president of Westwood  Memorial  Gardens,  Inc., a
cemetery  located in Spartanburg,  and the vice president of Piedmont  Crematory
since 1980. He also serves as the president of Business Communications,  Inc., a
local  provider of  telephone  services  and  equipment  since 1984.  Mr.  Floyd
graduated  form the  University  of North  Carolina - Chapel Hill in 1972 with a
bachelor  of  science  degree in  business  administration,  and he  received  a
bachelor of arts degree in psychology  from the  University of North  Carolina -
Charlotte in 1977. He served on the advisory  board for Wachovia of  Spartanburg
from 1994 until April 1999 and was past president of the Spartanburg  Boy's Home
for two terms  while  serving  on the board  from 1986  until  1999.  Mr.  Floyd
currently  serves  on the  board of  deacons  at First  Presbyterian  Church  of
Spartanburg  and the board of trustees for the  Spartanburg  YMCA.  Mr. Floyd is
also a member of the Spartanburg Rotary Club.

         Dr. C. Tyrone Gilmore,  Sr., Class III director,  is the superintendent
of  Spartanburg  County  School  District  7,  where he has  served in  numerous
capacities since 1965 including,  principal,  assistant principal,  teacher, and
athletics coach. He graduated from  Livingstone  College in 1965 with a bachelor
of arts degree.  Dr.  Gilmore  earned his Master's  degree in 1971 from Converse
College  and  received  his Ed.  S. in post  graduate  studies  in 1976 from the
University  of South  Carolina -  Spartanburg.  Dr.  Gilmore  has been an active
member of many organizations,  serving in various capacities, including advisory
board member of BB&T Bank, chairman of the local United Way Board, member of the
Lander  University  Board of  Trustees,  chairman  of the South  Carolina  State
Election Commission,  Grand Basileus of the Omega Psi Phi Fraternity, and member
of the Mary Black Foundation Board of Trustees.

         Dr.  Gaines  W.  Hammond,  Jr.,  Class  II  director,  is  a  physician
practicing with Mary Black Health Systems, LLC. Prior to joining Mary Black, Dr.
Hammond owned his own  practice,  Hammond and Bass,  P.A.,

                                       17
<PAGE>

from 1980 until June 1996. He has an ownership  interest in several  lithotripsy
partnerships,  as well as a publishing company and healthcare organization.  Dr.
Hammond  graduated from Washington and Lee University in 1971 with a bachelor of
science  degree,  and from the Medical  University of South Carolina in 1974. He
has served on the SCMA  legislative  committee,  the AMI medical advisory board,
and several  committees for Doctors Memorial  Hospital and Spartanburg  Regional
Medical Center.  He currently  serves as chairman of Mary Black Physicians Group
of  Mary  Black  Hospital  and is a  member  of  First  Presbyterian  Church  of
Spartanburg.

         Benjamin  R.  Hines,   Class  II  director,   has  been   president  of
Spencer/Hines  Properties,  a commercial real estate firm located in Spartanburg
since  1986.  He has  been  involved  in  numerous  real  estate  brokerage  and
development projects including,  retail, office, and industrial facilities.  Mr.
Hines was also  President  of Palmetto  Golf,  Inc.,  a golf  course  management
company, and currently serves as a partner in Advance Business Funding,  LLC., a
local company specializing in Factoring.  He also holds South Carolina and North
Carolina real estate licenses, and he has been licensed as a Certified Financial
Planner  since 1989.  Mr. Hines  graduated  from Wofford  College in 1978 with a
Bachelor's  Degree in Economics.  He has served on the Eastern Regional Advisory
Board of American  Federal Bank from 1994 until April 1999. In addition,  he has
acted as a Board  Member for the Pine  Street  YMCA and the Mary Black  Hospital
Advisory   Committee  and  was  Chairman  of  the  Board  for  Child  Evangelism
Fellowship, a non-profit Christian Ministry.

         William A.  Hudson,  Class I director,  is vice  chairman of  Diversco,
Inc., an outsourcing  and contract  services  business  located in  Spartanburg.
Since 1969,  Mr.  Hudson has held various  positions  with  Diversco,  including
chairman and chief executive  officer.  He graduated from Clemson  University in
1957  with a  bachelor  of  science  degree  in  education.  Mr.  Hudson  played
professional football for the San Diego Chargers,  Boston Patriots, and Montreal
Alouettes  from 1957 until  1963.  Mr.  Hudson  remains an active  member of the
business  community  maintaining  an  ownership  interest in several real estate
entities.  He served on the  Wachovia  Bank  advisory  board from 1995 until May
1999. Mr. Hudson is a member St. Paul United  Methodist  Church,  S.C.  Athletic
Hall of Fame,  and the Clemson  University  Athletic  Hall of Fame. He currently
serves on the board of directors for the  Spartanburg  Regional  Medical  Center
Heart Center.

         Robert (Bob) W. Murdoch, Jr., is senior vice president,  city executive
and  compliance  officer of First National Bank of  Spartanburg.  He has over 30
years of experience in the financial  services  industry.  Mr.  Murdoch was Vice
President and Executive  Officer with  Spartanburg  National Bank (Regions Bank)
from August 1988 until  February  2000,  when he resigned to join First National
Bank of Spartanburg.  From 1980 until 1988, he was  Vice-Presdient  and Regional
Consumer Banking Manager with Southern Bank (First Union). From 1970 until 1980,
Mr. Murdoch was Assistant  Vice-President and Branch Manager with South Carolina
National  Bank.  Mr.  Murdoch is a 1987  graduate of the Banker's  School of the
South at Louisiana State  University.  Mr. Murdoch currently serves on the Board
of  Directors  of the  American  Institute of Banking and also serves as a Board
member of the Cancer Association of Spartanburg and Cherokee County. Mr. Murdoch
is also a member of  Spartanburg  Area  Chamber of  Commerce  and Home  Builders
Association.

         Kitty B. Payne,  CPA, is the senior vice president and chief  financial
officer  of  First  National  Bancshares,   Inc.  and  First  National  Bank  of
Spartanburg.  Because we will be a new bank,  we must obtain  approval  from the
Office of the  Comptroller of the Currency for the  appointment of all executive
officers,  and we have recently  requested approval for Ms. Payne. Ms. Payne was
most recently employed with KPMG Peat Marwick,  LLP as a senior tax manager from
1992 until November 1999 where she worked  extensively  with community  banks in
the Carolinas.  Ms. Payne received her bachelors degree in financial  management
and  accounting  from Clemson  University in 1992.  She has been active with the
United Way of Greenville,  South Carolina and Junior  Achievement of Greenville,
South Carolina.

         Norman F. Pulliam, Class I director and chairman of the board, has been
the owner and  president  of Pulliam  Investment  Company,  Inc.,  a real estate
development  and property  management  company,  since 1971. Mr. Pulliam holds a
real  estate  broker's  license in South  Carolina  and North  Carolina.  He has
extensive real estate  experience and has developed,  owned, and managed several
office buildings,  apartments,  condominiums,  retirement communities,  assisted
living facilities,  and commercial land developments.  He graduated from Clemson
University in 1964 with a bachelor of science  degree in industrial  management,
and received his Masters of Business  Administration  from Harvard University in
1967.  Mr.  Pulliam has served as chairman  of the South


                                       18
<PAGE>

Carolina Manufactured Housing Board,  co-chairman of the Spartanburg Development
Council, chairman of the Piedmont Chapter of the American Red Cross, chairman of
the  Spartanburg  Convention and Visitors  Bureau,  president of the Spartanburg
Boy's Home, and was a member of Clemson  University's board of visitors.  He was
also a  director  for  Morgan  Bank &  Trust  Company  of  Spartanburg  and  the
Spartanburg Area Chamber of Commerce.  Mr. Pulliam  currently serves as chairman
of the board of  commissioners  for the South  Carolina  School for the Deaf and
Blind, and trustee of the Foundation for the  Multihandicapped,  Blind, and Deaf
of South Carolina.

         Peter E. Weisman, Class II director, is an owner and managing member of
Peter Weisman / Kinney Hill Associates,  LLC, a real estate development  company
established  in 1989 and  located in  Spartanburg.  Mr.  Weisman has also been a
general partner of P & J Realty Co., a real estate  development  company located
in New  York,  New  York,  since  1969.  He  graduated  from the  University  of
Pennsylvania  in 1961  with a degree  in  architecture.  Mr.  Weisman  is an AIA
licensed  architect  and an active  member of the  Society  of 1921  Spartanburg
Regional Foundation.

         Donald B. Wildman,  Class II director, is a managing partner of the law
firm of Johnson,  Smith,  Hibbard,  and  Wildman,  LLP.  Mr.  Wildman has been a
transactions  attorney  with the firm since 1974. He maintains an active role in
the  business  community  with  ownership   interests  in  several  real  estate
properties in the  Spartanburg  area. He graduated from Wofford  College in 1971
with a  bachelor  of arts  degree,  and  received  his  juris  doctor  from  the
University of South  Carolina  School of Law in 1974. Mr. Wildman is licensed as
an attorney and title insurance agent in South Carolina.  He served on the local
advisory  board for  NationsBank  from 1991 until  April 1999,  currently  is an
active  member  of  the  Spartanburg  County  Home  Builders  Association,   the
Spartanburg County Historical Association, and a member and elder of Westminster
Presbyterian  Church of  Spartanburg.  Mr. Wildman is currently  chairman of the
City of Spartanburg Board of Architectural Design and Historical Review.

         Coleman L. Young,  Jr.,  Class III director,  has been the president of
CLY, Inc., a dry cleaning business located in Spartanburg, since 1994. Mr. Young
also serves as property manager for Coleman Young Family Limited Partnership,  a
real estate development company, and chairman of Upward Unlimited,  a non-profit
ministry. Mr. Young graduated from Clemson University in 1979 with a bachelor of
science  degree.  Mr. Young served on the advisory  board of First Union Bank in
Spartanburg  from 1995 until May 1999 and is a former board member of the Better
Business  Bureau of the  Foothills.  He is currently  an active  member of First
Baptist Church of Spartanburg.

         David H. Zabriskie, is our senior vice president, chief lending officer
and CRA.  Officer.  He has over 15 years  experience in the  financial  services
industry.  Mr. Zabriskie was first vice president and commercial lending manager
with American  Federal Bank (CCB  Financial)  from September 1995 until December
1999.  Mr.  Zabriskie  has also served as a bank  examiner for the Office of the
Comptroller of the Currency and the Office of Thrift Supervision.  Mr. Zabriskie
received his bachelor's degree in business administration from Furman University
in 1984. Mr.  Zabriskie is an active member of the  Spartanburg  Area Chamber of
Commerce,  the  Junior  Achievement,  the  Board  of  Trustees  for  the  Walker
Foundation  (School for the Deaf and Blind),  the  Spartanburg  Downtown  Rotary
Club, and the Arts Partnership of Spartanburg County.


                                       19
<PAGE>


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

         The following  table shows the cash  compensation  we paid to our chief
executive officer and president for the year ended December 31, 1999.
<TABLE>
<CAPTION>

                           Summary Compensation Table


                                                                                             Long Term
                                                       Annual Compensation              Compensation Awards
                                                -----------------------------------     --------------------
                                                                       Other Annual     Number of Securities
Name and Principal Position          Year       Salary       Bonus     Compensation      Underlying Options
---------------------------          ----       ------       -----     ------------      ------------------

<S>                                <C>     <C>             <C>        <C>                <C>
Jerry L. Calvert                     1999    $76,685.60       ---    $ -0-                      ---
    Chief Executive Officer and
    President
</TABLE>

Employment Agreements

         We have entered into an employment  agreement with Jerry L. Calvert for
a  three-year  term,  pursuant  to which  serves  as the  president,  the  chief
executive  officer,  and a director of both our company and our subsidiary bank.
Mr. Calvert will be paid an initial  salary of $99,500,  plus his family medical
insurance premium.  His salary will increase to $110,000 per year on the day the
bank opens for  business.  The board of directors  may  increase  Mr.  Calvert's
salary above this level,  but not below it. He is entitled to receive a bonus of
$10,000  upon the  opening of the bank and will be eligible to receive an annual
bonus of up to 5% of the net  pre-tax  income  of our  bank,  if the bank  meets
performance  goals set by the board.  He will be eligible to  participate in any
management  incentive  program  of the bank or any  long-term  equity  incentive
program  and will be  eligible  for  grants of stock  options  and other  awards
thereunder.  Upon approval of our stock  incentive plan by our bank  regulators,
Mr.  Calvert  will be granted  options to  purchase a number of shares of common
stock  equal to 5% of the  number of  shares  sold in this  offering,  or 60,000
shares.  These options will vest over a five-year period and will have a term of
ten years. Additionally,  Mr. Calvert will participate in the bank's retirement,
welfare,  and other benefit  programs and is entitled to a life insurance policy
and an accident liability policy and reimbursement for automobile expenses, club
dues, and travel and business expenses.

         Mr.  Calvert's   employment  agreement  also  provides  that  following
termination of his employment and for a period of twelve months  thereafter,  he
may not (a) compete with the company,  the bank,  or any of its  affiliates  by,
directly or indirectly,  forming,  serving as an organizer,  director or officer
of,  or  consultant  to,  or  acquiring  or  maintaining  more  than 1%  passive
investment in, a depository financial  institution or holding company thereof if
such  depository  institution  or  holding  company  has one or more  offices or
branches  within  radius of thirty  miles from the main office of the company or
any branch office of the company,  (b) solicit  major  customers of the bank for
the purpose of providing  financial  services,  or (c) solicit  employees of the
bank for employment.  If Mr. Calvert terminates his employment for good cause as
that  term  is  defined  in  the  employment  agreement  or if he is  terminated
following a change in control of the bank as defined in the  agreement,  he will
be entitled to severance  compensation  of his then current monthly salary for a
period of 12  months,  plus  accrued  bonus,  and all  outstanding  options  and
incentives shall vest immediately.

Director Compensation

         Neither the company nor the bank paid  directors'  fees during the last
fiscal year.


                                       20
<PAGE>


                          Security Ownership of Certain
                        Beneficial Owners and Management

General

         The following table shows how much common stock in the company is owned
by the directors,  certain executive officers, and owners of more than 5% of the
outstanding  common  stock,  as of March 15, 2000. In addition,  each  organizer
received a warrant to purchase two shares of common stock at a purchase price of
$10.00 per share for every share three shares purchased by that organizer in the
offering, for a total of 313,333 shares. The warrants,  which are represented by
separate  warrant  agreements,  will vest over a three year period beginning one
year from the date of  completion  of the  offering and will be  exercisable  in
whole or in part during the ten year period following that date

         Name of Beneficial Owner                      Number(1)       Percent
         ------------------------                      ---------       -------
         C. Dan Adams                                    50,000         4.17%
         Mellnee G. Buchheit                             30,000         2.50%
         Jerry L. Calvert                                30,000         2.50%
         Martha C. Chapman                               20,000         1.67%
         W. Russel Floyd, Jr.                            30,000         2.50%
         Dr. C. Tyrone Gilmore, Sr.                      10,000         0.83%
         Dr. Gaines W. Hammond, Jr.                      60,000         5.00%
         Benjamin R. Hines                               42,000         3.50%
         William A. Hudson                               60,000         5.00%
         Kitty B. Payne                                   1,500         0.13%
         Norman F. Pulliam                               60,000         5.00%
         Peter E. Weisman                                33,000         2.75%
         Donald B. Wildman                               20,000         1.67%
         Coleman L. Young, Jr.                           25,000         2.08%
         David H. Zabriskie                                 200         0.02%
         All directors and executive officers           471,700        39.31%
         as a group (15 persons)


(1)      Includes shares for which the named person:

o        has sole voting and investment power,
o        has shared voting and investment power with a spouse or other person,
o        or holds in an IRA or other retirement plan program, unless otherwise
         indicated in these footnotes.

Does not include  shares that may be acquired by exercising  options or warrants
because no options or warrant are exercisable within the next 60 days.


                                       21

<PAGE>


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

         We enter into banking and other  transactions in the ordinary course of
business  with our  directors,  and  officers  and their  affiliates.  It is our
policy,  that these  transactions be on substantially  the same terms (including
price,  or interest rates and  collateral)  as those  prevailing at the time for
comparable   transactions  with  unrelated  parties.  We  do  not  expect  these
transactions to involve more than the normal risk of  collectibility  or present
other  unfavorable  features to us. Loans to  individual  directors and officers
must also comply with our bank's lending policies, regulatory restrictions,  and
statutory  lending  limits,  and directors with a personal  interest in any loan
application will be excluded from the consideration of such loan application. We
intend for all of our transactions  with organizers or other affiliates to be on
terms no less favorable than could be obtained from an unaffiliated  third party
and to be approved by a majority of our disinterested directors.

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

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

1.1      Form of Sales Agency  Agreement  between First National  Bancshares and
         J.C. Bradford and Company  (incorporated by reference to Exhibit 1.1 of
         the Registration Statement on Form SB-2, File No. 333-70589).

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).

5.1.     Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 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).

10.3.    Line of Credit  Promissory Note dated June 29,1999 between The Banker's
         Bank and First National Bank of Spartanburg  (incorporated by reference
         to Exhibit 10.3 of the  Registration  Statement on Form SB-2,  File No.
         333-70589).

10.4.    Purchase and Sale  Agreement  dated June 8, 1999 between First National
         Bancshares,  Inc.  and HBJ  Properties  (incorporated  by  reference to
         Exhibit  10.4 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).

10.6.    Form of Escrow Agreement  between First National  Bancshares,  Inc. and
         The Bankers  Bank  (incorporated  by  reference  to Exhibit 10.6 of the
         Registration Statement on Form SB-2, File No. 333-70589).


                                       22
<PAGE>

10.7.    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).

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

10.9.    Line of Credit  Promissory Note dated June 29,1999 between The Banker's
         Bank and First National Bank of Spartanburg  (incorporated by reference
         to Exhibit 10.3 of the  Registration  Statement on Form SB-2,  File No.
         333-70589).

10.10.   Purchase and Sale  Agreement  dated June 8, 1999 between First National
         Bancshares,  Inc.  and HBJ  Properties  (incorporated  by  reference to
         Exhibit  10.4 of the  Registration  Statement  on Form  SB-2,  File No.
         333-70589).

10.11.   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).

10.12.   Form of Escrow Agreement  between First National  Bancshares,  Inc. and
         The Bankers  Bank  (incorporated  by  reference  to Exhibit 10.6 of the
         Registration Statement on Form SB-2, File No. 333-70589).

27.1     *Financial Data Schedule (for electronic filing purposes).

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

         The  company  did not file any  reports  on Form 8-K  during the fourth
quarter of 1999.

---------------------------
         *Filed herewith



                                       23
<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  29, 2000                    By: /s/ 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.
<TABLE>
<CAPTION>

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

<S>                                   <C>                              <C>
/s/ C. Dan Adams                         Director                           March 29, 2000
-----------------------------------
C. Dan Adams

/s/ Mellnee G. Buchheit                  Director                           March 29, 2000
-----------------------------------
Mellnee G. Buchheit

/s/ Jerry L. Calvert                     Director,                          March 29, 2000
-----------------------------------      President,
Jerry L. Calvert                         Chief Executive Officer


/s/ Martha Cloud Chapman                 Director                           March 29, 2000
-----------------------------------
Martha Cloud Chapman

/s/ W. Russel Floyd, Jr.                 Director                           March 29, 2000
-----------------------------------
W. Russel Floyd, Jr.


/s/ C. Tyrone Gilmore, Sr.               Director                           March 29, 2000
-----------------------------------
C. Tyrone Gilmore, Sr.


/s/ Gaines W. Hammond, Jr., MD           Director                           March 29, 2000
-----------------------------------
Gaines W. Hammond, Jr., M.D.


                                       24
<PAGE>

/s/ Benjamin R. Hines                    Director                           March 29, 2000
-----------------------------------
Benjamin R. Hines

/s/ William A. Hudson                    Director                           March 29, 2000
-----------------------------------
William A. Hudson

/s/ Kitty B. Payne                       Chief Financial Officer,           March 29, 2000
-----------------------------------      Principal Financial and Accounting
Kitty B. Payne                           Officer


/s/ Norman F. Pulliam                    Director, Chairman                 March 29, 2000
-----------------------------------      of the Board
Norman F. Pulliam


/s/ Peter E. Weisman                     Director                           March 29, 2000
-----------------------------------
Peter E. Weisman

/s/ Donald B. Wildman                    Director                           March 29, 2000
-----------------------------------
Donald B. Wildman

/s/ Coleman L. Young, Jr.                Director                           March 29, 2000
-----------------------------------
Coleman L. Young, Jr.

</TABLE>


                                       25

<PAGE>
                                INDEX TO EXHIBITS

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

1.1      Form of Sales Agency  Agreement  between First National  Bancshares and
         J.C. Bradford and Company  (incorporated by reference to Exhibit 1.1 of
         the Registration Statement on Form SB-2, File No. 333-70589).

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  1.1 of the  Registration  Statement  on Form  SB-2,  File  No.
         333-70589).

5.1.     Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of
         the Registration Statement on Form SB-2, File No. 333-70589).

10.13.   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).

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

10.15.   Line of Credit  Promissory Note dated June 29,1999 between The Banker's
         Bank and First National Bank of Spartanburg  (incorporated by reference
         to Exhibit 10.3 of the  Registration  Statement on Form SB-2,  File No.
         333-70589).

10.16.   Purchase and Sale  Agreement  dated June 8, 1999 between First National
         Bancshares,  Inc.  and HBJ  Properties  (incorporated  by  reference to
         Exhibit  10.4 of the  Registration  Statement  on Form  SB-2,  File No.
         333-70589).

10.17.   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).

10.18.   Form of Escrow Agreement  between First National  Bancshares,  Inc. and
         The Bankers  Bank  (incorporated  by  reference  to Exhibit 10.6 of the
         Registration Statement on Form SB-2, File No. 333-70589).

27.1     *Financial Data Schedule (for electronic filing purposes).


        --------------------------
         *Filed herewith