First National Bancshares: Agreement In Principle Reached for Modification of Its Loan Agreement With Nexity Bank

SPARTANBURG, SC – Aug. 26, 2009 – First National Bancshares, Inc. (Nasdaq:FNSC) announced today that, pending regulatory approval, it has reached an agreement in principle to modify its loan agreement with Nexity Bank. The modified agreement, when executed, would eliminate covenant violations that arose in April.

We believe we are on the verge of resolving our loan agreement with Nexity Bank. This would remove First National from default and modify its current loan agreement, C. Dan Adams, Chairman of First National’s Board, said. Upon formal approval, this agreement would clear the way for First National to take actions to improve its capital ratios.

The agreement is awaiting approval of the State of Alabama Banking Department on behalf of Nexity. First National has already received regulatory approval for the proposed modification. No further details of the agreement were available.

First National Bancshares is the holding company for First National Bank of the South. Nexity is a Birmingham, AL, bank.

In another matter, on August 24, each Board member of First National Bancshares made an investment in the bank’s future by purchasing shares of First National Bancshares’ common stock in exchange for an aggregate capital contribution of $550,000.

About First National Bancshares

First National Bancshares, Inc., (Nasdaq:FNSC) is an $835-million asset bank holding company, based in Spartanburg, South Carolina. 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 13 full-service branches in six South Carolina counties. First National Bancshares was incorporated in 1999 to conduct general banking business through its wholly owned bank subsidiary, First National Bank of the South. Additional information about First National is available online at www.fnbwecandothat.com.