Loan Agreement

April 21, 2009

Jerry L. Calvert

President & CEO

First National Bancshares, Inc.

215 N. Pine Street

P.O. Box 3508

Spartanburg, SC  29304

Dear Mr. Calvert:

As of December 31, 2008, First National Bancshares, Inc. is not in compliance with Section 4., Negative Covenants c, e, f and g of the Loan Agreement dated December 28, 2007.  As a result, an event of default has occurred under Section 8 (ii) of the same Loan Agreement.  As such, Nexity Bank has the right to seek remedies granted in the loan documents including the right to “sell, assign and deliver or collect the whole or any part of the Collateral” (Pledge Agreement – 5. Default and 11. Power of Sale).  The collateral includes 1,100,000 shares of common stock of First National Bank of the South; stock certificate number 001 together with any and all stock rights, rights paid in stock, new securities or