FNSC First National Bancshares (SC) (MM)

First National Bancshares, Inc. (Nasdaq:FNSC) today announced its results for the quarter ended March 31, 2010. First National reported a decrease in troubled loans, an increase in recovery of assets, and continuing improvements in such important quarter-to-quarter indicators as core interest margins and decreased expenses.

For the first quarter 2010, First National Bancshares, the holding company for Spartanburg-based First National Bank of the South, posted a net loss of $5.4 million to common shareholders -- more than two-thirds of which was a $3.7 million, non-cash provision for loan losses that represents adjustments to the value of the Company's assets. Most noninterest expense categories -- in particular, salaries and benefits with a 20-percent reduction -- declined. FDIC insurance premiums, however, increased almost 600 percent for the first quarter of 2010 to $757,000 as compared to the first quarter of 2009, and this growth was in addition to increases in other regulatory fees. Credit quality was positively reflected in the significant year-to-year decrease of approximately $31 million, or 80 percent, in 30-89-day delinquencies to $7.6 million as of March 31, 2010.

"While we are not pleased the first quarter resulted in a $5.4 million loss, we do see significant indications of progress. With $3.7 million or 69 percent of that figure a result of non-cash provisions for loan losses, we cannot lose sight that this quarter's performance represents a decrease of $6 million, when compared to the fourth quarter of 2009," J. Barry Mason, President and CEO of both First National Bancshares and its subsidiary First National Bank of the South, said. "We have weathered many storms in this recession, though other challenges lie ahead for us."

Mason said: "We are encouraged by the performance of our newest branch at Fort Mill/Tega Cay, which has attracted more than $25 million in deposits since opening a year ago," and cited these significant positive events have transpired since year-end 2009: 

• Net interest margin improvement;

• Overhead expense reduction;

• Reduction in non-performing assets;

• Recoveries of $1 million on nonperforming assets, and;

• Increased liquidity. 

"We continue to aggressively manage our balance sheet, from write-downs of real-estate assets to allowing brokered deposits to run off. Such actions demonstrate how diligently First National is striving to improve its capital ratios," Mason said. "As we see signs of our regional economy improving, First National remains committed to its goals of making quality loans, attracting deposits, and providing the very best service to its customers."

First National also made continued progress in complying with the recommendations of regulators. Like all U.S. banks, every First National depositor is insured by the FDIC by up to $250,000. 

"Management is driving continuous improvements at First National Bancshares. We believe we will continue to make major strides as the economy recovers, as we gain additional capital, and as we continue the bank's resilience in handling non-performing assets," C. Dan Adams, Chairman of First National Bancshares, said. "Though the future is uncertain, First National remains committed to goals of delivering value to our stakeholders -- customers, communities and shareholders -- through capital, credit quality and customer service."

First National Bancshares' 10-Q filing, with full financial tables, is available at the U.S. Securities and Exchange Commission site, www.sec.gov.

About First National Bancshares

First National Bancshares, Inc. (Nasdaq:FNSC) is a bank holding company, based in Spartanburg, South Carolina, with approximately $675 million in assets. It provides a wide range of financial services to consumer and commercial customers through its wholly owned banking subsidiary, First National Bank of the South, which has full-service branches in six South Carolina counties. Additional information about First National is available online at www.fnbwecandothat.com.

Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements include but are not limited to (1) statements regarding potential future economic recovery, (2) statements with respect to First National's plans, objectives, expectations and intentions and other statements that are not historical facts, and (3) other statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," and "projects," as well as similar expressions. Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which First National conducts operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the company's loan portfolio and allowance for loan losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in First National's loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in the U.S. legal and regulatory framework; and (5) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the company; and (6) whether First National will be able to accomplish the directives contained in the Consent Order with the Office of the Comptroller of the Currency effective as of April 27, 2009, and continue as a going concern. Additional factors that could cause First National's results to differ materially from those described in the forward-looking statements can be found in First National's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above. First National does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

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