FIRST NATIONAL CORP /SC/, S-2, 1996-05-29

FIRST NATIONAL CORP /SC/
S-2, 1996-05-29
STATE COMMERCIAL BANKS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FIRST NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)

South Carolina 57-0799315
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

345 John C. Calhoun Drive, S.E.
Orangeburg, South Carolina 29115
(803) 531-0527
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------

W. LOUIS GRIFFITH Copies to:
Chief Financial Officer GEORGE S. KING, JR., ESQ.
First National Corporation SUZANNE HULST CLAWSON, ESQ.
345 John C. Calhoun Drive, S.E. Sinkler & Boyd, P.A.
Orangeburg, South Carolina 29115 1426 Main Street, Suite 1200
(803) 531-0527 Columbia, South Carolina 29201
(Name, address, including Zip Code, and telephone (803) 779-3080
number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [x]

If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [x]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

<TABLE>
<CAPTION>
===============================================================================================================================
Calculation of Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of each class maximum offering maximum
of securities to be Amount to be price per unit aggregate offering Amount of
registered registered (Per Rule 457(f)(2)) price registration fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 170,000 Shares $27.00 $4,590,000 $1,582.76
===============================================================================================================================
</TABLE>

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE>

--------------------------------------------------------

CROSS REFERENCE SHEET

Pursuant to Item 501(b) of Regulation S-K

Item
Number Caption in Form S-2 Caption in Prospectus

<S> <C> <C>
1 Forepart of Registration Statement and
Outside Front Cover Page of Prospectus....................... Facing Page of Registration Statement,
Cross Reference Sheet, Prospectus
Cover Page

2 Inside Front and Outside Back Cover Pages
of Prospectus................................................ Available Information, Summary Table
of Contents

3 Summary Information, Risk Factors and Ratio
of Earnings to Fixed charges................................. Summary, Risk Factors

4 Use of Proceeds.............................................. Use of Proceeds

5 Determination of Offering Price.............................. Risk Factors, Offering and Method of Subscription

6 Dilution..................................................... Not Applicable

7 Selling Security Holders..................................... Not Applicable

8 Plan of Distribution......................................... Offering and Method of Subscription

9 Description of Securities to be Registered................... Description of FNC Common Stock

10 Interests of Named Experts and Counsel....................... Not Applicable

11 Information with Respect to Registrant....................... Information About FNC and the Banks

12 Incorporation of Certain Information by
Reference.................................................... Incorporation of Certain Documents by Reference

13 Disclosure of Commission Position on
Indemnification for Securities Act Liabilities............... Description of FNC Common Stock

</TABLE>

<PAGE>

Prospectus
FIRST NATIONAL CORPORATION

170,000 SHARES
COMMON STOCK ($5.00 PAR VALUE)
$27.00 per share

First National Corporation ("FNC"), hereby offers for sale up to
170,000 shares of its $5.00 par value common stock (the "FNC Common Stock") at a
price of $27.00 per share. FNC is a South Carolina corporation and is a bank
holding company for First National Bank, a national bank headquartered in
Orangeburg, South Carolina. FNC is in the process of sponsoring the organization
of the National Bank of York County (Proposed), a national bank being organized
in Rock Hill, South Carolina (First National Bank and the National Bank of York
County are sometimes referred to herein collectively as the "Banks"). Upon
receipt of necessary regulatory approvals, FNC intends to acquire all of the
common stock of the National Bank of York County, and thereby capitalize the new
bank, using funds borrowed by FNC pursuant to a line of credit with another
financial institution.

The primary purposes of this offering are to repay as much as possible
of the funds borrowed to acquire the common stock of the National Bank of York
County and funds expended by FNC for expenses of this offering, and to give as
many York County residents as possible the opportunity to participate in
capitalization of the new bank. Most of the organizers of the National Bank of
York County are from the York County area and wish to enhance the support base
for the new bank by selling common stock of the bank's proposed parent holding
company in the York County area. The offering of FNC common stock will not,
however, be limited to York County.

Any subscription funds submitted to FNC prior to commencement of
banking operations by the National Bank of York County will be held in an escrow
account with First National Bank until commencement of banking operations by the
National Bank of York County. Upon commencement of banking operations by the
National Bank of York County, funds paid with respect to subscriptions accepted
by FNC will be distributed to FNC and FNC will issue stock certificates to
subscribers for the number of shares subscribed or the portion of the number of
shares subscribed as to which the subscription has been accepted. No interest
will be paid on escrowed funds. Any subscription funds relating to accepted
subscriptions received after commencement of banking operations by the National
Bank of York County will be paid directly to FNC and a stock certificate will be
issued by FNC to the subscriber for the number of shares as to which the
subscription has been accepted.

This offering will terminate on the earlier of (1) receipt by FNC of
subscriptions for an aggregate of 170,000 shares; (2) a decision by FNC to
terminate the offering; or (3) [120 days from commencement of the offering],
unless extended by FNC (the "Expiration Date"). While FNC intends to use its
best efforts to sell 170,000 shares, the offering may be terminated without
notice before all such shares are sold. No minimum amount of proceeds is
required to be raised pursuant to this offering. See "OFFERING AND METHOD OF
SUBSCRIPTION."

Commencement of operations by the National Bank of York County and
acquisition of the National Bank of York County's common stock by FNC are
contingent upon approvals by state and federal agencies. If the National Bank of
York County has not commenced banking operations by August 21, 1997, or such
later date to which the Office of the Comptroller of the Currency may extend its
preliminary charter approval, FNC will promptly return all subscription funds,
without interest thereon.

There is no established active trading market for the FNC Common Stock
and one may not develop in the foreseeable future.

THE PURCHASE OF THESE SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS," page 4. THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=====================================================================================================
Price Underwriting
to Discounts and Proceeds to
Public Commissions(1) FNC(2)(3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE: $27.00 0.00 $27.00
------------- ---- -------------
TOTAL:
170,000 shares.............. $4,590,000.00 0.00 $4,590,000.00
============= ==== =============
</TABLE>

(1) These securities will be offered only by the officers and directors of FNC
and the proposed officers and directors of the National Bank of York
County. No commissions or other compensation will be paid to any such
person in connection with this offering. See "OFFERING AND METHOD OF
SUBSCRIPTION -- Plan of Distribution."

(2) Before deduction of expenses associated with this offering payable by FNC,
estimated at $50,000.

(3) If regulatory approvals for FNC to acquire the common stock of the National
Bank of York County are not received by February 21, 1997, or if the
National Bank of York County fails to open for any other reason by such
date, the offering will be withdrawn and all subscription funds will be
promptly returned without interest thereon.

The date of this Prospectus is ___________, 1996.

<PAGE>

AVAILABLE INFORMATION

FNC is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Copies of such reports, proxy statements and other
information can be obtained, upon payment of prescribed fees, from the SEC at
450 Fifth Street, N.W., Room 2120, Judiciary Plaza, Washington, D.C. 20549. In
addition, such reports, proxy statements and other information can be inspected
at the SEC's facilities referred to above and at the SEC's Regional Offices at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center, Suite 1300, New York, New York 10048.

FNC has filed with the SEC a Registration Statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the FNC Common
Stock offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to FNC and the FNC Common Stock offered hereby,
reference is hereby made to the Registration Statement, including the exhibits
and schedules thereto. The Registration Statement can be inspected and copied at
the public reference facilities of the SEC, 450 Fifth Street, N.W., Room 2120,
Judiciary Plaza, Washington, D.C. 20549, and copies of such materials can be
obtained by mail from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed rates. In addition,
microfiche of the Registration Statement and exhibits thereto are available for
inspection and reproduction at the public reference facilities of the SEC at its
Regional Offices, at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and 7 World Trade Center, Suite 1300, New York, New York 10048.

FNC furnishes shareholders with annual reports containing audited financial
information.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the SEC are hereby incorporated by
reference in this Prospectus: FNC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, FNC's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, and portions of FNC's Annual Report to
Shareholders for the fiscal year ended December 31, 1995, as set forth herein
under "INFORMATION ABOUT FNC AND THE BANKS -- FNC and First National Bank."

The following documents (without exhibits) are being delivered herewith:
FNC's Annual Report to Shareholders for the fiscal year ended December 31, 1995,
and FNC's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
Copies of exhibits to the documents delivered herewith may be obtained upon
written request to W. Louis Griffith, Chief Financial Officer, First National
Corporation, 345 John C. Calhoun Drive, S.E., Orangeburg, S.C. 29115, (803)
531-0527. FNC will charge 20 cents per page for copies of such exhibits.

All documents filed by FNC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date hereof and prior to termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the respective dates of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference will be deemed to be modified or superseded for
the purpose of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any such
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference herein
and, if given or made, such information or representations must not be relied
upon as having been authorized. This document does not constitute an offer to
exchange or sell or a solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
document nor any distribution of securities made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of FNC since the date hereof or that the information herein is correct
as of any time subsequent to the date hereof.

<PAGE>

TABLE OF CONTENTS

Page
AVAILABLE INFORMATION........................................................ i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................. i
SUMMARY .................................................................... 1
FNC and the Banks................................................... 1
The Offering........................................................ 2
Risk Factors........................................................ 2
Selected Financial Data............................................. 2
RISK FACTORS................................................................. 4
Risk Inherent in Establishment of a New Business.................... 4
No Interest on Subscription Funds................................... 4
No Dividends Paid on Subscribed Shares Prior to Issuance............ 4
Sales Price......................................................... 4
Market for the Shares............................................... 4
Delay in Obtaining Regulatory Approvals............................. 5
Regulatory Restrictions On Dividends................................ 5
Certain Provisions of the Articles of Incorporation................. 5
Industry Developments............................................... 5
Competition......................................................... 5
Loan Losses; Capital Deficiency..................................... 6
Governmental Regulation of the Financial Services Industry.......... 6
Monetary Policy and Other Economic Factors.......................... 6
FNC AND THE BANKS............................................................ 6
OFFERING AND METHOD OF SUBSCRIPTION.......................................... 7
The Offering........................................................ 7
Method of Subscription.............................................. 8
Plan of Distribution................................................ 8
Expiration Date of the Offering..................................... 8
Certain Contingencies............................................... 8
Issuance of FNC Common Stock........................................ 9
USE OF PROCEEDS.............................................................. 9
By FNC ........................................................... 9
By the National Bank of York County................................. 9
CONSOLIDATED CAPITALIZATION.................................................. 9
MARKET PRICE OF COMMON STOCK AND DIVIDENDS................................... 10
INFORMATION ABOUT FNC AND THE BANKS.......................................... 11
FNC and First National Bank......................................... 11
The National Bank of York County.................................... 11
Background of Organization.......................................... 11
Organizers of the National Bank of York County...................... 12
Stock Purchase Commitments by Organizers of
the National Bank of York County.................................. 13
Market Area......................................................... 13
Competition......................................................... 14
Services to be Offered.............................................. 14
Data Processing..................................................... 15
Asset and Liability Management...................................... 15
Anticipated Growth.................................................. 15
Premises............................................................ 16
Employees........................................................... 16

<PAGE>

Page No.

MANAGEMENT OF FNC AND FIRST NATIONAL BANK.................................... 16
Beneficial Stock Ownership of Executive Officers
and Directors..................................................... 16
Business Experience of Executive Officers and Directors
for the Past Five Years........................................... 18
EXECUTIVE COMPENSATION....................................................... 19
Employment Agreements............................................... 20
Restricted Stock Plan............................................... 21
INFORMATION PERTAINING TO STOCK OPTION PLANS................................. 21
1992 Plan........................................................... 21
1996 Plan........................................................... 22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.................. 23
OTHER BENEFIT PROGRAMS - DEFINED BENEFIT PENSION PLAN........................ 23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................... 24
DESCRIPTION OF FNC COMMON STOCK.............................................. 25
Statutory Matters................................................... 27
SUPERVISION AND REGULATION................................................... 28
Regulation of Bank Holding Companies................................ 28
Capital Adequacy Guidelines for Bank Holding Companies
and National Banks................................................ 29
Payment of Dividends................................................ 30
Certain Transactions by FNC with its Affiliates..................... 31
FDIC Insurance Assessments.......................................... 31
Regulation of the Banks............................................. 31
Other Safety and Soundness Regulations.............................. 32
Interstate Banking.................................................. 33
Legislative Proposals............................................... 34
Fiscal and Monetary Policy.......................................... 34
EXPERTS .................................................................... 34
LEGAL MATTERS ............................................................... 34

APPENDIX A - Information about Annual Report to Shareholders for the year ended
December 31, 1995

APPENDIX B - Information about Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996

APPENDIX C - Subscription Agreement

iii

<PAGE>

SUMMARY

The following is a brief summary of certain information contained in this
Prospectus and is not intended to be a complete statement of all material facts
regarding the matters set forth herein. It is qualified in its entirety by
reference to more detailed information set forth in this Prospectus, the
accompanying appendices, and the documents incorporated by reference herein.

FNC and the Banks

FNC is a bank holding company which owns First National Bank. First
National Bank currently operates as a full service commercial bank with 20
branches in the Lowcountry region of South Carolina. The deposits of First
National Bank are insured to applicable limits by the Federal Deposit Insurance
Corporation (the "FDIC").

FNC is in the process of making application to state and federal regulatory
authorities for approval to become a multi-bank holding company by acquisition
of the National Bank of York County. If all final approvals are received, FNC
will be permitted to own both First National Bank and the National Bank of York
County.

The National Bank of York County is a proposed national bank being
organized in Rock Hill, South Carolina. Preliminary charter approval from the
Office of the Comptroller of the Currency (the "OCC") [and conditional approval
of FDIC insurance] have already been received. The National Bank of York County
will operate as a wholly owned subsidiary of FNC with its own Board of Directors
and operating policies. The organizers of the National Bank of York County are
Bernard N. Ackerman, Ronnie P. Campbell, R. Wesley Hayes, Jr., Robert R. Hill,
Jr., C. John Hipp, III, Ralph W. Norman, Jr., Jacob D. Smith, and Frank M.
Wilkerson, Jr.

If all state and federal regulatory approvals are received for FNC to
acquire the National Bank of York County and for the National Bank of York
County to be chartered, FNC intends to use $4,500,000 borrowed by it pursuant to
a line of credit with a financial institution to acquire all of the common stock
of the National Bank of York County and thereby capitalize the National Bank of
York County. Proceeds of this offering will be used first to reimburse FNC for
expenses of this offering, then to repay as much as possible of such borrowed
funds and for general corporate purposes of FNC.

The principal offices of FNC and First National Bank are located at 345
John C. Calhoun Drive, S.E., Orangeburg, South Carolina 29115. FNC's telephone
number is (803) 534-2175. The principal office of the National Bank of York
County will be located at 1127 Ebenezer Road, Rock Hill, South Carolina.

<PAGE>

The Offering

Shares of Common Stock offered................ Up to 170,000

Offering price per share...................... $27.00

Minimum Individual Purchase................... 100 Shares(1)

Maximum Individual Purchase................... 7,400 Shares(1)

Shares of Common Stock outstanding............ 2,244,339

Shares of Common Stock to be
outstanding after this offering...... If 170,000 shares sold: 2,414,339

Use of proceeds(2)............................ First, to reimburse FNC for
expenses of this offering, then
to repay borrowings incurred by
FNC for the purpose of
capitalizing the National Bank of
York County and for general
corporate purposes of FNC.

----------------

(1) FNC reserves the right to alter the minimum and maximum purchase amounts in
its sole discretion. See "OFFERING AND METHOD OF SUBSCRIPTION -- The
Offering."
(2) The proceeds of this offering will be placed in an escrow account with
First National Bank pending commencement of banking operations by the
National Bank of York County. After commencement of banking operations by
the National Bank of York County, escrowed funds will be distributed to
FNC. Subscription proceeds accepted after commencement of banking
operations by the National Bank of York County will be paid directly to
FNC. See "USE OF PROCEEDS," and "RISK FACTORS -- Delay in Obtaining
Regulatory Approvals."

The Directors of FNC and the organizers of the National Bank of York County
presently plan to purchase an aggregate of 53,758 shares of FNC Common Stock in
this offering, though they may decide to purchase more or fewer shares. See
"INFORMATION ABOUT FNC AND THE BANKS -- Stock Purchase Commitments by Organizers
of the National Bank of York County" and "MANAGEMENT OF FNC AND FIRST NATIONAL
BANK -- Beneficial Stock Ownership of Executive Officers and Directors."

Risk Factors

An investment in the shares offered hereby involves certain risks,
including, among others, the possibility that delay in obtaining final
regulatory approvals required to acquire the National Bank of York County and
final regulatory approvals required for the National Bank of York County to
commence operations will increase pre-opening expenses, absence of an active
existing market for the securities offered hereby and lack of assurance that an
active trading market in such securities will develop, competition from other
financial institutions with substantially greater financial and other resources,
certain provisions of the Articles of Incorporation of FNC that may discourage
or prevent take-over attempts, and other risks attendant to the operation of
financial institutions. See "RISK FACTORS."

Selected Financial Data.

The following table presents on an historical basis selected unaudited
consolidated financial data for First National Bank and FNC. The data is based
on the financial statements of First National Bank and FNC incorporated by
reference herein. Reference is made to these statements and the related notes
for more detailed data. Results for the three months ended March 31, 1996 are
not necessarily indicative of results to be expected for the entire year. All
adjustments necessary to a fair statement of results of interim periods of FNC,
in the opinion of management of FNC, have been included. Such adjustments were
of a normal recurring nature.

<PAGE>

<TABLE>
<CAPTION>
Selected Financial Data
(Dollars in Thousands, except per share data)

Three Months Ended
March 31,
Years Ended December 31,
--------------------- ----------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income $ 1,397 $ 1,140 $ 4,640 $ 4,061 $ 3,773 $ 3,295 $ 2,933
Per share .62 .51 2.07 1.82 1.69 1.48 1.32
Total assets 454,287 391,893 436,322 374,043 349,056 333,984 315,967
Cash dividends declared .18 .165 0.68 0.64 0.60 0.56 0.55
per share

Book value per share 18.20 16.51 17.72 16.17 14.96 13.75 12.69
</TABLE>
<TABLE>
<CAPTION>

Financial Ratios 1996 1995 1995 1994 1993 1992 1991
- -------------------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets .31% .30% 1.13% 1.10% 1.09% 1.00% 0.95%
Return on average equity 3.50 3.11 12.25 11.67 11.79 11.17 10.82
Dividend payout ratio 28.92 29.47 30.24 29.45 28.62 29.79 32.82
Average equity to average assets 8.86 9.61 9.25 9.44 9.20 8.94 8.78
</TABLE>
<TABLE>
<CAPTION>

December 31 Average Daily Balance

Percent Percent
Balance Sheet Highlights 1995 1994 Change 1995 1994 Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans-net of unearned income $247,883 $208,552 18.9% $227,466 $193,135 17.8%

Total earning assets 399,379 341,908 16.8% 378,476 340,269 11.2%

Total assets 436,322 374,043 16.7% 409,426 368,373 11.1%

Demand deposits 56,735 48,035 18.1% 52,611 47,069 11.8%

Total deposits 368,315 320,707 14.8% 343,723 314,286 9.4%

Total interest-bearing liabilities 337,413 287,969 17.2% 316,484 284,591 11.2%

Shareholders' equity 39,777 36,181 9.9% 37,873 34,789 8.9%

</TABLE>

All information has been retroactively restated to give effect to the
merger of Santee Cooper State Bank with and into First National Bank effective
at the close of business on December 31, 1992.

Per share data have been retroactively adjusted to give effect to a five
percent common stock dividend paid to shareholders of record on August 31, 1993,
and ten percent common stock dividends paid to shareholders of record on each of
October 28, 1994 and October 31, 1995.

This information should be read in conjunction with Management's Discussion
and Analysis of Results of Operations and Financial Condition and is qualified
in its entirety by reference to the more detailed financial statements and the
notes thereto contained the 1995 Annual Report to Shareholders.

<PAGE>

RISK FACTORS

Investment in the securities offered hereby involves risk. Accordingly,
each prospective subscriber, before subscribing for any shares, should consider
certain risks and speculative features inherent in and affecting the business to
be carried on by the Banks and FNC. An investment should be made only after
careful consideration of the risk factors set forth below and elsewhere in this
Prospectus, and should be undertaken only by persons who can afford an
investment involving such risks. In addition to individual considerations and
the factors set forth elsewhere herein, each prospective subscriber should
consider the following:

Risk Inherent in Establishment of a New Business

FNC and First National Bank have relatively long operating histories, but
the National Bank of York County is currently in the organizational stage and
has no operating history. Accordingly, prospective purchasers of securities
offered hereby have limited information relating to the prospects for success of
the National Bank of York County or the effect the National Bank of York County
will have on operations of FNC. As a bank holding company, FNC's profitability
depends entirely upon operations of its subsidiary banks. The operations of the
National Bank of York County will be subject to the risks inherent in the
establishment of a new business and, specifically, of a new bank. Typically, new
banks incur substantial initial expenses and are not profitable for several
years after commencing business. Furthermore, there can be no assurance that the
National Bank of York county will ever operate profitably or that First National
Bank will continue to operate profitably.

No Interest on Subscription Funds

All interest earned on subscription proceeds will be retained by FNC.
Although all subscription funds will be returned if the National Bank of York
County has not opened for business by August 21, 1997 (or such later date to
which the OCC shall extend the preliminary charter approval), no interest will
be paid to subscribers on such returned subscription funds.

No Dividends Paid on Subscribed Shares Prior to Issuance

Subscribers will not be entitled to payment of dividends, if any, declared
on the FNC Common Stock with respect to any subscribed shares until after the
shares are issued. After issuance of subscribed shares, subscribers will be
entitled to receive dividends, when, as and if declared, beginning with the
first dividend payment made after a record date on which such persons were
record holders of the FNC Common Stock.

Sales Price

The price of the FNC Common Stock offered hereby has not been set as the
result of arm's length negotiations. FNC has, however, obtained an opinion as to
a range of value of the FNC Common Stock and the price at which shares are
offered hereby is within such range. See "MARKET PRICE OF COMMON STOCK AND
DIVIDENDS."

Market for the Shares

There is no established active market for the FNC Common Stock, and no
active market is expected to develop in the near future. Accordingly, owners of
FNC Common Stock who wish to resell their shares may experience difficulty in
selling the shares on short notice. See "MARKET PRICE OF COMMON STOCK AND
DIVIDENDS." Furthermore, there can be no assurance that a purchaser would be
able to resell shares at or above the price paid for such shares pursuant to
this offering.

<PAGE>

Delay in Obtaining Regulatory Approvals

FNC must secure the prior approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and of the South Carolina State Board of
Financial Institutions (the "State Board") to acquire the stock of the National
Bank of York County. An application was filed with the Federal Reserve on April
22, 1996. Before the National Bank of York County may issue its stock to FNC,
the Office of the Comptroller of the Currency (the "OCC") must approve the
Organizers' application for a bank charter and the FDIC must approve deposit
insurance. Preliminary approval of the bank charter was granted by the OCC on
February 21, 1996, and conditional approval of deposit insurance was granted by
the FDIC on _______, 1996. Capitalization of the National Bank of York County is
a condition precedent to receipt of the final regulatory approvals. Any
significant delay in commencing business will increase pre-opening expenses and
may reduce the National Bank of York County's and FNC's capital, potential
revenues and income.

If the National Bank of York County has not commenced banking operations by
August 21, 1997, or such later date to which the OCC may extend its preliminary
charter approval, FNC will promptly return all subscription funds. No interest
will be paid on such returned funds.

Regulatory Restrictions On Dividends

FNC's principal operations are conducted through its subsidiary, First
National Bank, and, upon completion of its organization, will also be conducted
through the National Bank of York County. Accordingly, FNC generates cash to pay
dividends primarily through dividends paid and to be paid to it by the Banks.
The Banks' ability to pay dividends to FNC and FNC's ability to pay dividends on
its Common Stock are subject to and limited by certain legal and regulatory
restrictions. See "SUPERVISION AND REGULATION -- Payment of Dividends."

Certain Provisions of the Articles of Incorporation

FNC's Articles of Incorporation include several provisions that may have
the effect of discouraging or preventing hostile take-over attempts, and of
making the removal of incumbent management difficult. The provisions include
staggered terms for the Board of Directors and requirements of super-majority
votes to approve certain business transactions. See "DESCRIPTION OF FNC COMMON
STOCK." To the extent that these provisions are effective in discouraging or
preventing take-over attempts, they may tend to reduce the market price for the
FNC Common Stock, or delay or prevent a corporate transaction even though a
majority of the shareholders support the transaction.

Industry Developments

In the recent past, legislation has been enacted that could have a dramatic
effect on both the costs of doing business and the competitive factors facing
the financial institutions industry. Additional such legislation is constantly
being considered by Congress. FNC is unable at this time to determine the
impact, if any, of future legislation on its financial condition or operations.
See "SUPERVISION AND REGULATION."

Competition

It is anticipated that the National Bank of York County will encounter
strong competition from established financial institutions operating in the York
County, South Carolina area. York County is adjacent to Mecklenburg County,
North Carolina, in which Charlotte, North Carolina is located. Charlotte is a
major banking center in the Southeast, and NationsBank and First Union National
Bank, which are both headquartered there, are dominant in the Charlotte market
and have a significant share of the York County banking market as well.
Furthermore, established financial institutions not currently operating in the
Rock Hill area may, under South Carolina law, open branches in the York County
area at future dates. The National Bank of York County also expects to encounter
competition from two other start up banks being organized in the Rock Hill area.
In the conduct of certain aspects of its banking business, the National Bank of
York County will also compete with savings and loan associations, credit unions,
mortgage banking firms, consumer finance companies, insurance companies, money
market mutual funds and other financial institutions, some of which are not
subject to the same degree of regulation

<PAGE>

as the National Bank of York County. Many of these competitors have
substantially greater resources and lending limits than the National Bank of
York County is expected to have and offer certain services, such as extensive
and established branch networks, and international banking services, that the
National Bank of York County either does not expect to provide or will not
provide initially. See "INFORMATION ABOUT FNC AND THE BANKS -- The National Bank
of York County -- Competition." The Organizers believe that the National Bank of
York County will be able to compete effectively with these institutions through
the use of personalized service, loan participations and other techniques, but
no assurances can be given in this regard.

First National Bank faces similar competition in the Lowcountry region of
South Carolina. Although it has historically been able to meet the challenge of
such competition, there is no assurance that it will always be able to do so.

Loan Losses; Capital Deficiency

The Banks expect to lend a substantial portion of their capital and
deposits to individual and commercial borrowers. The Banks' managements will
attempt to be prudent in making such loans, but some loan losses are
unavoidable. Changes in the economy both at the national and local levels and
other factors, both unpredictable and outside the control of the Banks, could
affect the ability of borrowers to repay their loans. It is possible that,
collectively, defaults by the Banks' borrowers could be large enough to impair
the ability of the Banks to continue their operations. Loan losses and other
losses might reduce the Banks' capital below the level required by federal law
and regulations which could result in either or both of the Banks being placed
in receivership by the OCC and in a partial or complete loss of FNC's equity in
the Banks.

Governmental Regulation of the Financial Services Industry

During the past few years, significant legislative and regulatory
deregulation of certain aspects of the financial services industry has taken
place. Nonbanking financial institutions, such as securities brokerage firms,
insurance companies and money market funds, are now permitted to offer services
which compete directly with services offered by banks. At the same time, the
services which banks are permitted to offer have been expanded, and restrictions
have been reduced on the rates of interest that banks may pay on deposits. The
Banks' profitability will be largely dependent upon the rate differential
between the interest earned by the Banks on loans to customers and the rate of
return on the Banks' investments, and the interest paid by the Banks on deposits
and other liabilities. While deregulation and increasing competition may result
in the Banks' paying increased interest rates to obtain deposits, a comparable
increase in interest rates on their loans and the rate of return on their
investments may not be attainable, resulting in reduced "spread" and lower
earnings or higher losses. See "SUPERVISION AND REGULATION" and "INFORMATION
ABOUT FNC AND THE BANKS."

Monetary Policy and Other Economic Factors

Changes in governmental economic and monetary policy may affect the ability
of the Banks to attract deposits and make loans. The rates of interest payable
on deposits and chargeable on loans are affected by governmental regulation and
fiscal policy as well as by national, state, and local economic conditions. See
"SUPERVISION AND REGULATION -- Fiscal and Monetary Policy."

FNC AND THE BANKS

FNC was incorporated under South Carolina law in 1985. FNC owns all of the
common stock of First National Bank, which was chartered in 1934 and operates
from twenty offices in thirteen South Carolina towns. First National Bank serves
South Carolina as an independent, locally-managed commercial bank emphasizing
high quality, responsive and personalized service, and offers a broad range of
retail, consumer and commercial banking services. See "INFORMATION ABOUT FNC AND
THE BANKS -- FNC and First National Bank -- Business."

The directors of FNC and of First National Bank are Charles W. Clark, W. B.
Cox, C. Parker Dempsey, Clarence F. Evans, E. Everette Gasque, Jr., John L.
Gramling, Jr., C. John Hipp, III, Robert R. Horger, R. H. Jennings, III, J. C.
McAlhany, Dick Gregg McTeer, Harry M. Mims, Jr., E. V. Mirmow, Jr., M. Maceo
Nance, Jr., Anne H. Oswald, James W.

<PAGE>

Roquemore, James E. Sulton, Sr., Johnny E. Ward, A. Dewall Waters, and L.
D. Westbury. See "MANAGEMENT OF FNC AND FIRST NATIONAL BANK."

The organizers and proposed directors of the National Bank of York County
are Bernard N. Ackerman, Ronnie P. Campbell, R. Wesley Hayes, Jr., Robert R.
Hill, Jr., C. John Hipp, III, Ralph W. Norman, Jr., Jacob D. Smith and Frank M.
Wilkerson, Jr. Robert R. Hill, Jr. is the proposed president of the National
Bank of York County. Upon commencement of business, the deposit accounts of the
National Bank of York County will be insured by the FDIC up to the maximum
amount permitted by law. The National Bank of York County will serve the York
County, South Carolina area as an independent, locally-managed commercial bank
emphasizing high quality, responsive and personalized service. See "INFORMATION
ABOUT FNC AND THE BANKS -- The National Bank of York County -- Services to be
Offered."

FNC is in the process of applying to state and federal regulatory
authorities for approval to acquire all of the common stock of the National Bank
of York County. The organizers of the National Bank of York County submitted an
application fora national bank charter on January 8, 1996, and preliminary
approval of the charter application was granted on February 21, 1996.
Conditional approval of deposit insurance was issued by the FDIC on _______,
1996. If and when FNC and the National Bank of York County obtain all necessary
state and federal approvals, FNC will use $4,500,000 borrowed pursuant to a line
of credit with another financial institution to acquire all of the common stock
of the National Bank of York County. Proceeds of this offering will be applied
first to reimbursement of FNC for expenses of this offering, then to repayment
of such borrowed funds and to FNC's general corporate uses. See "USE OF
PROCEEDS."

OFFERING AND METHOD OF SUBSCRIPTION

The Offering

FNC is offering hereby up to 170,000 shares of FNC Common Stock at a price
of $27.00 per share. The price of the FNC Common Stock offered hereby has not
been set as the result of arm's length negotiations. FNC has, however, obtained
an independent opinion relating to a range of value of the FNC Common Stock, and
the price at which shares are being offered pursuant hereto is within such
range.

The minimum individual purchase pursuant to this offering is 100 shares,
and the maximum is 7,400 shares. FNC reserves the right to alter the individual
minimum and maximum purchase amounts should conditions so warrant and
specifically reserves the right to approve purchases of more than 7,400 shares.
Subscribers should be aware that beneficial ownership of more than 10% of the
outstanding Common Stock of FNC would obligate the beneficial owner to comply
with certain notice, reporting and disclosure requirements of federal banking
and securities laws, and beneficial ownership of 5% of the outstanding Common
Stock of FNC would obligate the owner to comply with certain reporting and
disclosure requirements under the federal securities laws.

Any subscription funds relating to accepted subscriptions received after
commencement of banking operations by the National Bank of York County will be
paid directly to FNC and a stock certificate will be issued by FNC to the
subscriber for the number of shares as to which the subscription has been
accepted.

Prior to commencement of banking operations by the National Bank of York
County, subscription checks should be made payable to "First National Bank, as
escrow agent for First National Corporation." After commencement of banking
operations by the National Bank of York County, subscription checks should be
made payable to "First National Corporation."

<PAGE>

Prior to commencement of banking operations by the National Bank of York
County, subscription funds will be deposited by the Escrow Agent in certificates
of deposit or other accounts of the Escrow Agent. Any interest earned on the
funds will be the property of FNC. If the National Bank of York County has not
commenced banking operations by August 21, 1997 (or such later date to which the
OCC may extend preliminary charter approval), FNC will promptly refund all
subscription funds. No interest will be paid to subscribers on such refunded
subscription funds. See "Certain Contingencies."

Method of Subscription

Shares may be subscribed for by delivery, on or prior to the Expiration
Date (as defined below), of the enclosed subscription form, completed and
executed, together with full payment of the subscription price, to First
National Corporation, Attention: W. Louis Griffith at 345 John C. Calhoun Drive,
S.E., Orangeburg, South Carolina 29115, or at Post Office Box 1287, Orangeburg,
South Carolina 29116-1287. Subscriptions may also be sent to First National
Corporation, Attention: W. Louis Griffith, at Post Office Box 3186, Rock Hill,
South Carolina 29732. All subscription payments shall be made in United States
dollars by check, bank draft, or money order drawn to the order of "First
National Bank, Escrow Agent for First National Corporation" (if submitted prior
to commencement of banking operations by the National Bank of York County), or
to "First National Corporation" (if submitted after commencement of banking
operations by the National Bank of York County). Any payments received by FNC
prior to commencement of banking operations by the National Bank of York County
will be delivered to the Escrow Account promptly.

FNC reserves the right to reject any offer of subscription in whole or in
part or to cancel acceptance of any subscription offer in whole or in part until
the date the shares purchased hereunder are issued. If all or part of a
subscription is not accepted or is cancelled by FNC, all funds relating to the
unaccepted or cancelled portion shall be promptly returned to the subscriber
without interest thereon. Only the President or the Chief Financial Officer of
FNC has the authority to accept or reject a subscription, or portion thereof, on
behalf of FNC.

Plan of Distribution

This offering is being made to the public through the officers and
directors of FNC and the proposed officers and directors of the National Bank of
York County. No commission or other sales compensation will be paid to any
officer or director of FNC or any proposed officer or director of the National
Bank of York County in connection herewith.

Expiration Date of the Offering

FNC will offer shares hereunder until the earlier of (1) receipt by FNC of
subscriptions for an aggregate of 170,000 shares; (2) a decision by FNC to
terminate the offering; or (3) [120 days from commencement of the offering],
unless extended by FNC (the "Expiration Date"). While FNC intends to use its
best efforts to sell 170,000 shares, the offering may be terminated without
notice before all such shares are sold.

Certain Contingencies

If the National Bank of York County has not commenced banking operations by
August 21, 1997 (or such later date to which the OCC may extend preliminary
charter approval), FNC will promptly refund all subscription funds. No interest
will be paid on such refunded funds.

The capitalization of the National Bank of York County is required to take
place before final regulatory approvals are obtained. Should such approvals be
denied for any reason, and should the National Bank of York County fail to
commence banking operations by August 21, 1997 (or such later date to which the
OCC may extend preliminary charter approval), the subscription funds raised
hereby will be refunded on the basis described in the preceding paragraph. Any
significant delay in commencing banking operations will increase pre-opening
expenses and may reduce the National Bank of York County's and FNC's capital,
potential revenues and income.

<PAGE>

Issuance of FNC Common Stock

Certificates representing the FNC Common Stock offered hereby,
subscriptions for which have been paid by the subscribers and accepted by FNC,
are expected to be issued shortly after the National Bank of York County
commences operations.

USE OF PROCEEDS

By FNC

No minimum amount is required to be raised pursuant to this offering. If
170,000 shares are sold, the net proceeds to FNC from this offering would be
approximately $4,540,000 after deduction of offering expenses estimated at
approximately $50,000. Upon receipt of final regulatory approvals, FNC will use
up to $4,500,000 of the net proceeds to repay borrowings incurred by FNC to
purchase all of the common stock of the National Bank of York County. Such
borrowings bear interest at the lender's prime rate minus 75 basis points, and
mature February 28, 1997. The lender has, however, agreed to consider amortizing
over a term not to exceed five years any principal balance remaining at the
maturity date, subject to documentation, pricing, and underwriting acceptable to
both FNC and the lender. The balance of the net proceeds of this offering, if
any, will be used for general corporate purposes.

By the National Bank of York County

Of the $4,500,000 received by the National Bank of York County from the
sale of its stock to FNC, approximately $300,000 is expected to be used for the
purchase from FNC (at FNC's cost) of the land on which the National Bank of York
County will be located, approximately $650,000 is expected to be used to build
the bank's offices, and approximately $260,000 is expected to be used for
equipment and furnishings.

The balance of the proceeds from the sale of the stock of the National Bank
of York County to FNC is estimated to be $3,290,000. These funds will be
commingled with funds obtained by the National Bank of York County from other
sources, principally expected to be customer deposits, and will be employed in
banking operations, including making loans to customers, making investments and,
until operations begin to generate income, paying current operating expenses
(including management salaries). The amount and manner in which these funds will
be used will be subject to the discretion of management and policies of the
National Bank of York County and FNC in light of current market conditions and,
therefore, cannot now be usefully predicted.

CONSOLIDATED CAPITALIZATION

The following table sets forth the actual capitalization of FNC as of March
31, 1996, and the capitalization of FNC as adjusted to give effect to the sale
of 170,000 shares of FNC Common Stock in the present offering as though the FNC
Common Stock had been sold on March 31, 1996.

<PAGE>

Actual As Adjusted
March 31, If 170,000(1)
1996 shares sold
<S> <C> <C>
Long term debt:................................................... -0- -0-
Stockholders' equity:.............................................
Common stock:
$5.00 par value, 5,000,000 shares authorized:
2,247,636 shares outstanding.................................... 11,238,000
2,417,636 shares outstanding.................................... 12,088,000
Surplus:.......................................................... 16,288,000 19,978,000
Retained earnings:................................................ 13,234,000 13,234,000
Unrealized gain (loss) on securities
available-for-sale, net of applicable
deferred income taxes:.......................................... (157,000) (157,000)
----------- -----------
Total shareholders' equity: ...................................... $40,603,000 $45,143,000
</TABLE>

(1) Assumes sale of 170,000 shares and offering expenses of $50,000, the
maximum amount estimated, and repayment of all borrowings incurred by FNC
to purchase the stock of the National Bank of York County. Should fewer
than 170,000 shares be sold, the adjusted figures for the number of shares
outstanding and the amount of Common Stock and Total Stockholders' Equity
would be reduced, and the amount of long term debt would be increased.

MARKET PRICE OF COMMON STOCK
AND DIVIDENDS

The FNC Common Stock is not listed on any exchange, nor is there a
recognized or established trading market for the common stock. Management
believes that the common stock has traded at prices ranging between $18.50 and
$27.25 per share during the past two years, giving retroactive effect to stock
dividends and stock splits. However, management has knowledge of only a limited
number of trades and has no independent means of verifying the price at which
trading has occurred. Furthermore, such trades may not involve arm's length
transactions, and are not necessarily indicative of the value of the FNC Common
Stock. There were approximately 1,718 shareholders at January 18, 1996.

Quarterly cash dividends of $0.165, $0.165, $0.17 and $0.18 per share were
paid in the first, second, third and fourth quarters of 1995, respectively, and
cash dividends of $0.16 per share were paid in each quarter of 1994. FNC has
achieved a consistent record of increasing earnings over the past years. Even
though dividends have historically been increased, FNC has maintained a
relatively constant dividend pay-out policy. The dividend pay-out ratio for 1995
was 30.2 percent compared to 29.5 percent in 1994 and 28.6 percent for 1993.
Cash dividend payments in 1995 were $1,403,000 as compared to $1,196,000 in
1994. The retention of the remaining earnings has provided the basis for
expansion internally of loans and investments, and acquisitions.

Dividends are paid by FNC from its assets which are mainly provided by
dividends paid to FNC by First National Bank. After acquisition of the National
Bank of York County, that bank is also expected to be a source of future
dividends for FNC. However, certain restrictions exist regarding the ability of
the Banks to transfer funds to FNC in the form of cash dividends, loans or
advances. The approval of the OCC is required to pay dividends in excess of the
Banks' net profits for the current year plus retained net profits (net profits
less dividends paid) for the preceding two years, less any required transfers to
surplus. As of December 31, 1995, $8,768,000 of First National Bank's retained
earnings were available for distribution to FNC as dividends without prior
regulatory approval. In 1995, First National Bank paid dividends to FNC of
$1,403,000.

<PAGE>

INFORMATION ABOUT FNC AND THE BANKS

FNC and First National Bank

The following information set forth on the indicated pages of the 1995
Annual Report is incorporated herein by reference herein and provided herewith:

(a) Item 1. "Business," pages 64 through 71;
(b) Item 2. "Properties," page 71;
(c) Item 3. "Legal Proceedings," page 71;
(d) Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations," pages 6 through 28; and
(e) Item 8. Audited Consolidated Financial Statements of FNC, pages 29
through 62.

FNC's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 is
also incorporated by reference herein and provided herewith.

The National Bank of York County

On January 8, 1996, the organizers of the National Bank of York County
filed an application with the OCC for charter approval. Preliminary charter
approval was granted by the OCC on February 21, 1996. Conditional approval of
FDIC deposit insurance was received on ___________, 1996. If final OCC and FDIC
approval are granted, the National Bank of York County will engage in the
commercial banking business in York County, South Carolina.

Background of Organization

Substantially all of the large financial institutions headquartered in
South Carolina have been acquired by regional bank holding companies over the
past five years. As a result, South Carolina and its citizens have lost much of
the ability to control financial resources and decisions relating to allocations
of those resources. More and more frequently, underwriting decisions are being
made outside South Carolina by entities and people not familiar with the
borrowers or the communities to be served. In many instances, banking customers
have become frustrated with the delays attendant to such external decision
making and with the lower levels of personal services occasioned by
consolidation and reductions in personnel.

In the face of encroaching bank regionalism, FNC perceives opportunities
for community banks offering local decision making, highly personalized service
and a commitment to the well-being and advancement of the communities served.
First National Bank has successfully competed with regional competitors.
Although these competitors have greater financial and managerial resources than
First National Bank, management of First National Bank believes that it
compensates for these factors by offering a high level of personal service and
by responding quickly and efficiently to customer needs.

Over the past year, FNC has been assessing the possibilities for, and
feasibility of, organizing another community bank. Because the Chief Executive
Officer of FNC has close ties to the York County area arising from his previous
banking experience in Rock Hill and recognized the strong potential for a
community bank there, York County was considered a good opportunity for
expansion into the Upcountry region of South Carolina. Management of FNC,
therefore, approached several York County-area businessmen with the idea of
organizing a new bank in York County. The approach was enthusiastically received
by these businessmen, who agreed that opportunities are likely to exist for a
well-managed community bank that offers local decision-making and highly
personalized service. Several meetings were held between management of FNC and
the proposed York County organizing group, and an Organizational Agreement
relating to the proposed organization of the National Bank of York County by the
organizers and acquisition of the National Bank of York County by FNC was
entered into on September 27, 1995.

<PAGE>

Organizers of the National Bank of York County

Set forth below is information about the Rock Hill businessmen who are the
organizers of the National Bank of York County.

Bernard N. Ackerman is a certified public accountant and is President of
Bernard N. Ackerman, CPA, P.A. in Rock Hill, where he has practiced since 1977.
Mr. Ackerman is treasurer of the Rock Hill Breakfast Rotary Club and is
treasurer of the Fort Mill Rescue Squad.

Ronnie P. Campbell has been Chief Executive Officer of AME, Inc. since
1985. AME, Inc. is an industrial contractor, which provides foundation
insulation, complete plant relocation, rental of heavy equipment and fabrication
of water and sewer equipment. Mr. Campbell is a director of the Fort Mill United
Way and a member of the Fort Mill Lions Club.

R. Wesley Hayes, Jr. is an attorney with Harrelson & Hayes in Rock Hill,
where he has practiced since 1986. Mr. Hayes has served as a member of the South
Carolina Senate from York County since 1991, and served as a member of the South
Carolina House of Representatives from 1984 to 1991. Mr. Hayes is also a member
of the South Carolina Bar Association, President of the York County Young
Lawyers Division of the York County Bar Association, and a member of the
American Legion, the Kiwanis Club and the Elks Club.

Robert R. Hill, Jr., the proposed President of the National Bank of York
County was employed by Rock Hill National Bank (which was acquired by
NationsBank), from 1991 until September of 1995 when he left to help organize
the National Bank of York County. At Rock Hill National Bank, Mr. Hill most
recently held the position of Vice President of Commercial Lending. In this
position Mr. Hill managed five commercial lenders with a total portfolio of
approximately $120,000,000. Prior to his promotion to Vice President of
Commercial Lending, Mr. Hill was an area manager for Rock Hill National Bank. In
this position he supervised four branches and approximately 30 employees. After
the acquisition of Rock Hill National Bank by NationsBank, Mr. Hill's
responsibilities remained the same as when he was Vice President of Commercial
Lending for Rock Hill National Bank and he was designated a team leader for
NationsBank's northern region of South Carolina. From July, 1988 to January,
1991, Mr. Hill was a branch manager and commercial lender for the University
City Office of Wachovia Bank in Charlotte, North Carolina, where he supervised
12 employees. While at Wachovia, Mr. Hill was selected for and participated in
the Wachovia internship program, which included intensive training in loan
administration focusing on credit analysis, credit risks and documentation of
files. Mr. Hill is a member of the Board of the United Way of Rock Hill and a
member of the Rock Hill Chamber of Commerce and the Rock Hill Rotary Club.

C. John Hipp, III is President and Chief Executive Officer of First
National Bank and First National Corporation, positions he has held since 1994.
From 1991 to 1994, Mr. Hipp served as President and Chief Executive Officer of
Rock Hill National Bank and Rock Hill National Bank Corporation. Prior to 1991,
Mr. Hipp served in various positions, including positions in Corporate Banking,
Retail and Loan Administration, with Wachovia Corporation. Mr. Hipp currently
serves as a Director of the South Carolina Independent Bankers' Association,
Trustee of the Orangeburg Regional Medical Center, President of the Downtown
Orangeburg Revitalization Association, and Director of the Edisto Physicians
Hospital Corporation.

Ralph W. Norman, Jr. is President of Warren Norman Co., Inc., a privately
owned real estate firm in Rock Hill, where he has been employed since 1975. Mr.
Norman is a licensed realtor and is a member of the Realtors National Marketing
Institution. Mr. Norman is President and a Director of the York County Board of
Realtors, President of the York County Rotary Club, President of the Home
Builders Association of York County, a member of the Board of Directors of the
York County Salvation Army, a member of the Board of Directors and Treasurer of
the Westminster - Catawba School, a member of the Board of Directors of the
Winthrop Eagle Club of Winthrop University, and a past Director of the Rock Hill
Chamber of Commerce. Mr. Norman has previously served as a member and Chairman
of the Local Board of Directors of C&S Bank of South Carolina, as a member of
the Board of Directors of Rock Hill National Bank and as an Advisory Board
Member of NationsBank.

<PAGE>

Jacob D. Smith is President of Smith Enterprises, Inc., a position he has
held since 1995. Prior to 1995, Mr. Smith served as Executive Vice President of
Smith Enterprises, Inc. Smith Enterprises, Inc. is a major producer of candy
filled Easter baskets and related novelties and markets a line of gourmet food
gifts and bath care gift sets, all of which are distributed through major mass
retailers. Mr. Smith is a member of the National Association of Manufacturers, a
member of the National Association of Food Trade and a member of the American
Wholesale Manufacturing Association. Mr. Smith is also a member of the Rock Hill
Chamber of Commerce and of the Museum of York County.

Frank M. Wilkerson, Jr. is President of Wilkerson Fuel Co., Inc., a
wholesale and retail petroleum marketer in South Carolina, North Carolina and
Georgia, a position he has held since 1980. Mr. Wilkerson is a member of the
Board of Directors of the South Carolina Petroleum Marketing Association, a
member of the Board of Directors of the Winthrop Eagle Club of Winthrop
University, a member of the Board of Directors of the Rock Hill YMCA, and a
member of the Board of Directors of the Rock Hill County Club.

Stock Purchase Commitments by Organizers of the National Bank of York County

Subject to compliance with applicable securities laws, the organizers of
the National Bank of York County have indicated their present intention to
purchase an aggregate of 18,150 shares pursuant to this offering for an
aggregate price of $490,050. The organizers may, however, subsequently decide to
purchase more or fewer shares.

Market Area

The primary market area to be served by the National Bank of York County
will be the County of York, South Carolina and the immediately adjacent areas.
York County is located in the northern piedmont portion of South Carolina. The
County is bordered to the north by Mecklenburg County, North Carolina, where
Charlotte, the largest city in North or South Carolina is located, to the east
by Lancaster County, to the west by Cherokee County and to the south by Chester
County. York County is served by Interstate 85, which extends from Atlanta,
Georgia, to Richmond, Virginia, and Interstate 77, which extends from Columbia,
South Carolina to Cleveland, Ohio. Both of these interstates provide the County
with easy access to downtown Charlotte, which is less than a 30 minute drive
from most sections of York County. York County is the fifth fastest-growing
county among the 46 counties in the State, with a 23% increase in population
from 106,720 in 1980 to 131,497 in 1990 and a projected increase to 153,700 in
2000. The County has a land area of approximately 685 square miles.

The City of York is the county seat of the County. The City of Rock Hill is
the largest city in the County.

York County enjoys a diversified economy. The major employment groups are
manufacturing, wholesale and retail trade and services. In recent years, the
County has emerged as a major industrial distribution and manufacturing center.
Facilities located in York County produce many industrial products, including
bleached woodpulp, newsprint, coated paper, automotive oil and air filters,
terry cloth towels, formaldehyde, cellulose acetate filament and staple, knit
sportswear, carpet yarn, truck axles, brakes and components, Easter baskets and
novelties, and poly-cotton sheeting.

York County is considered a part of the Charlotte-Gastonia-Rock Hill
Metropolitan Statistical Area (the "Charlotte MSA"). The Charlotte MSA is
presently ranked as the third largest banking center in the country, with two of
the nation's largest bank holding companies headquartered there, NationsBank
Corporation and First Union Corporation.

The Catawba Nuclear Station supplies power to the Charlotte MSA and other
parts of North and South Carolina. Its first reactor was completed in 1986 and
its second in 1987. The facility is the largest taxpayer and employer in the
County, and is owned by an association of power companies including North
Carolina Municipal Power Agency, North Carolina Electric Membership Association,
Piedmont Municipal Power Agency, Saluda River Electric Cooperative, and Duke
Power Company.

Agriculture also remains an important source of income in York County. The
principal products include beef cattle, dairy products, poultry, cotton,
peaches, soybeans and small grains.

<PAGE>

Competition

South Carolina law permits statewide branching by banks and savings and
loan associations, and many financial institutions have branch networks. South
Carolina law also permits regional interstate banking, and five of the larger
commercial banks in the Rock Hill area are affiliated with regional banking
groups. Thirteen financial institutions are represented in York County,
including eight banks ranging in total deposit size from $17 million to $383
million, and five credit unions with aggregate deposits of $92 million. (Source:
Sheshunoff - The Branches of South Carolina, 1995). York County is adjacent to
Mecklenburg County, North Carolina, where Charlotte, North Carolina is located.
Charlotte is a major banking center in the Southeast and two of the largest
banks in the United States, NationsBank and First Union National Bank, are
headquartered there. These banks have a significant share of the York county
banking market.

Banks generally compete with other financial institutions through the
banking products and services offered, the pricing of services, the level of
service provided, the convenience and availability of services, and the degree
of expertise and personal concern with which services are offered. It is
anticipated that the National Bank of York County will encounter strong
competition from most of the financial institutions in its extended market area.
The National Bank of York County also expects to encounter competition from two
other new banks being organized in the Rock Hill area. In the conduct of certain
areas of its banking business, the National Bank of York County will also
compete with credit unions, consumer finance companies, insurance companies,
money market mutual funds and other financial institutions, some of which are
not subject to the same degree of regulation and restrictions imposed upon the
National Bank of York County. Many of these competitors have substantially
greater resources and lending limits than the National Bank of York County will
have and offer certain services, such as international banking services, that
the National Bank of York County will not provide initially. Moreover, most of
these competitors have numerous branch offices located throughout the extended
market area. This is a competitive advantage that the National Bank of York
County will not have in the near future. The National Bank of York
Countybelieves, however, that its relatively small size will permit it to offer
more personalized service than many of its competitors, which may provide a
competitive advantage. The National Bank of York County should also be able to
compensate for its lower initial lending limits by participating larger loans
with First National Bank and other institutions.

Services to be Offered

In its marketing plan, the National Bank of York County will emphasize
local management and commitment to the industrial and business growth of the
Rock Hill area. The National Bank of York County intends to provide personalized
banking services, with emphasis on knowledge of the individual financial needs
and objectives of its customers and an appropriate array of services to meet
those needs and objectives.

The services offered will include a full range of deposit services that are
typically available in most banks and savings and loan associations, such as
checking accounts, NOW accounts, and savings 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 the
principal market area at rates competitive with those offered in the area. In
addition, retirement accounts such as IRA's (Individual Retirement Accounts)
will be made available. All deposit accounts will be insured by the FDIC up to
the maximum amount permitted by law. The National Bank of York County intends to
solicit these accounts from individuals, businesses, associations and
organizations, and government authorities. Although the National Bank of York
County intends to be competitive in its efforts to attract deposit accounts, it
does not expect to aggressively seek jumbo certificates of deposit (certificates
in amounts greater than $100,000) and does not intend to accept brokered deposit
accounts.

The National Bank of York County will offer a full range of short- and
intermediate-term commercial and personal loans. The National Bank of York
County also intends to originate variable-rate residential and other mortgage
loans for its own account and for resale, and intends to make personal loans
directly to individuals for various other purposes, including purchases of
automobiles, mobile homes, boats and other recreational vehicles, home
improvements, education and personal

<PAGE>

investments. Commercial loans, secured and unsecured, will be made primarily to
individuals and small and mid-sized businesses operating in and around York
County. These loans will be available for general operating purposes,
acquisition of fixed assets, including real estate, purchases of equipment and
machinery, financing of inventory and accounts receivable, and other business
purposes.

Although the National Bank of York County will take a progressive and
competitive approach to lending, it will stress high quality in its loans. To
promote such quality lending, the Board of Directors of the National Bank of
York County will establish lending authority for each loan officer. Each loan
request exceeding a loan officer's authority will have to be approved by one or
more senior officers. A loan committee of the Board of Directors will review
larger loans for approval when the loan request exceeds established limits for
the senior officers. Because of the bank's community orientation, such quality
control is not expected to interfere with the goal of providing prompt and
personal response to customers.

The National Bank of York County may participate in a regional network of
automated teller machines that may be used by its customers in major cities
throughout the Southeast. The National Bank of York County plans to offer both
VISA and MasterCard brand credit cards together with related lines of credit.
Lines of credit may also be offered for overdraft protection as well as a
pre-authorized credit for personal purchases and expenses.

The National Bank of York County will also provide safe deposit boxes,
travelers checks, direct deposit of payroll and social security checks, and
automatic drafts for various accounts, but will not provide international
banking services in the near future.

Data Processing

First National Bank will provide computer and item processing services to
the National Bank of York County. Management of FNC expects that this will
result in significant cost savings to both Banks.

Asset and Liability Management

The primary assets of the National Bank of York County will consist of the
loan portfolio and investment account. Efforts will be made generally to match
maturities and rates of loans and the investment portfolio with those of
deposits, although exact matching will not be possible. The majority of the
National Bank of York County's securities investments will be in marketable
obligations of the United States Government, federal agencies and state and
municipal governments, generally with varied maturities.

Long-term loans will be priced primarily to be interest-rate sensitive with
only a small portion of the National Bank of York County's portfolio of
long-term loans at fixed rates. For the foreseeable future, such fixed-rate
loans will not have maturities longer than five years, except in exceptional
cases.

Deposit accounts will represent the majority of the liabilities of the
National Bank of York County. These will include transaction accounts, time
deposits and certificates of deposit. The National Bank of York County does not
intend to aggressively seek certificates of deposit over $100,000. The
maturities of most interest-sensitive accounts will be six months or less.

Anticipated Growth

The National Bank of York County's initial capitalization is expected to be
$4,500,000, which would support National Bank of York County assets of
approximately $30 million, based on current bank regulatory guidelines. See "USE
OF PROCEEDS." The National Bank of York County's growth is expected to come
primarily from within the York County area through loan and deposit business
generated at the National Bank of York County's proposed main office located in
the business section of Rock Hill.

<PAGE>

Premises

The principal offices of the National Bank of York County will be located
at 1127 Ebenezer Road in Rock Hill, South Carolina. FNC acquired this property
from an unaffiliated third party. FNC will transfer the properties to the
National Bank of York County at FNC's cost. l l Employees l l It is anticipated
that the National Bank of York County will employ approximately 13 full-time
employees during l its first year of operations. To the greatest extent
possible, the National Bank of York County will employ people experienced in the
banking profession, and efforts will be made to employ people who are natives of
the York County area or who are knowledgeable about the area.

MANAGEMENT OF FNC AND FIRST NATIONAL BANK

The following tables set forth as of December 31, 1995 information about
persons who currently serve as executive officers and directors of FNC and First
National Bank. There are no family relationships among any of the directors and
executive officers of FNC.

Beneficial Stock Ownership of Executive Officers and Directors

The following table sets forth information about (i) the beneficial stock
ownership of executive officers and directors of FNC as of December 31, 1995;
and (ii) the pro forma beneficial stock ownership of such persons after this
offering. Although some executive officers and directors of FNC presently plan
to purchase stock in this offering for up to the additional number of shares
included in the pro forma amounts shown below, such persons are not obligated to
purchase shares in this offering, and may decide to purchase more or fewer
shares than the number shown below or may decide not to purchase any shares.

Actual Pro Forma
------ ---------
% of Common
Number of % of Number of Stock
Shares Common Shares to be Ownership
Beneficially Stock Beneficially if 170,000
Name Owned Ownership Owned Shares Sold
---- ----- --------- ----- -----------
<S> <C> <C> <C> <C>
E. Everett Gasque, Jr. 17,438(1) * 18,179 *
John L. Gramling, Jr. 3,020(2) * 3,946 *
Robert R. Horger 5,576 * 7,576 *
Harry M. Mims, Jr. 10,965 * 14,669 *
Dick G. McTeer 315 * 426 *
James W. Roquemore 3,214(3) * 3,214 *
Johnny E. Ward 11,265(4) * 18,672 *
M. Maceo Nance, Jr. 1,514(5) * 1,514 *
Charles W. Clark 23,308 1.04% 24,419 1.01%
Clarence F. Evans 4,753 * 4,753 *
C. John Hipp, III 23,554(6) 1.05% 25,406 1.05%
Robert H. Jennings, III 37,476(7) 1.70% 37,476 1.55%
Edward V. Mirmow, Jr. 35,751 1.60% 40,000 1.65%
Larry D. Westbury 9,237(8) * 9,237 *
William B. Cox 106,764(9) 4.75% 114,171 4.72%
C. Parker Dempsey 3,716 * 4,086 *
J. Carlisle McAlhany 37,308 1.70% 39,160 1.62%
Anne H. Oswald 298(10) * 372 *
James E. Sulton, Sr. 393 * 493 *
A. Dewall Waters 5,747(11) * 9,451 *
All directors and
Executive Officers as a
Group (22 persons) 349,215(12) 15.50 384,823 15.92%

</TABLE>

- -----------------------------
*Less than 1% of outstanding FNC Common Stock.

(1) Includes 1,185 shares owned by spouse.
(2) Includes 595 shares owned by spouse.
(3) Includes 392 shares in an IRA; 1,134 shares owned by spouse in an IRA; and
600 shares held by Mr. Roquemore as custodian for his three children.
(4) Includes 7,958 shares held in an IRA.
(5) Includes 1,076 shares held in joint tenancy account with spouse.
(6) Includes 377 shares in an IRA; 155 shares owned by spouse in an IRA; 14,450
shares owned by a general partnership in which Mr. Hipp owns a 1/7
interest, of which Mr. Hipp disclaims beneficial ownership of all but 2,064
shares; 1,512 shares subject to currently exercisable options; and 5,185
shares of restricted stock which Mr. Hipp presently has the right to vote.
(7) Includes 12,822 shares owned by spouse.
(8) Includes 1,358 shares held in an IRA account; and 6,098 shares subject to
currently exercisable options.
(9) Includes 49,660 shares owned by spouse, as to which Mr. Cox disclaims
beneficial ownership.
(10) Includes 12 shares held in joint tenancy account with spouse.
(11) Includes 1,484 shares held in an IRA.
(12) Includes 12,849 shares subject to currently exercisable options.

<PAGE>

Business Experience of Executive Officers and Directors for the Past Five Years

The table below sets forth the name, address, position in FNC and First
National Bank and year first elected, expiration of term as a director, and
business experience for the past five years for each of the directors and
executive officers of FNC.

Position in FNC and Year First Business Experience
Name, Age and Address First National Bank Elected Director for the Past Five Years
--------------------- ------------------- ---------------- -----------------------

Directors Whose Terms Expire in 1999

<S> <C> <C> <C>
William B. Cox Director Bank-1969 Chairman of the Board, Cox Wood
Orangeburg, SC (70) FNC-1985 Preserving Co., Inc. - Wood preserving
and processing.

C. Parker Dempsey Director Bank-1983 Secretary, Dempsey Wood Products,
Orangeburg, SC (67) FNC-1985 Inc., (since 1990) - Lumber
Manufacturer; Executive Vice President,
Stone Forest Industries (prior to 1990)
- Forestry services.

J. Carlisle McAlhany Director Bank-1969 Retired Merchant.
Reevesville, SC (80) FNC-1985

Anne H. Oswald Director 1991 Partner, Oswald and White Realty -
Walterboro, SC (48) Real estate brokerage agency.

A. Dewall Waters Director 1987 Partner, Main Waters Enterprises
Orangeburg, SC (51) Partnership -Owner/Operator,
McDonald's Restaurants.

</TABLE>
<TABLE>
<CAPTION>

Directors Whose Terms Expire in 1998

<S> <C> <C> <C>
E. Everett Gasque, Jr. Director 1993 President, E. E. Gasque & Son, Inc. -
Elloree, SC (65) Farming Supplies and Products.

John L. Gramling, Jr. Director Bank-1974 Farmer.
Orangeburg, SC (64) FNC-1985

Robert R. Horger Vice Chairman 1991 Vice Chairman of the Board, First
Orangeburg, SC (45) of the Board National Bank and First National
Corporation since 1994;Attorney-
Horger, Barnwell and Reid.

Harry M. Mims, Jr. Director 1988 Consultant (since 1996); President, J.
Orangeburg, SC (54) F. Cleckley & Company - Road
construction and paving contractor
(prior to 1996).

Dick G. McTeer Director 1994 Retired Motel Owner/Operator.
Bluffton, SC (69)

James W. Roquemore Director 1994 Executive Vice President, Patten Seed
Orangeburg, SC (40) Company, Inc., Lakeland, Georgia;
General Manager of Super- Sod/Carolina
- Production and marketing of turf,
grass, sod and seed. Owner and operator
of golf courses in Georgia.

<PAGE>

Johnny E. Ward Director 1991 President, W & W Truck & Tractor
Moncks Corner, SC (54) Company, Inc. - Logging and farming
equipment, sales and service.

</TABLE>
<TABLE>
<CAPTION>

Directors Whose Terms Expire in 1997

<S> <C> <C> <C>
M. Maceo Nance, Jr. Director 1995 Retired President, South Carolina State
Orangeburg, SC (70) University.

Charles W. Clark Director 1993 President, Santee Shores, Inc. - Real
Santee, SC (46) Estate Development and Management.

C. John Hipp, III President and Chief 1994 1994 - present, President and Chief
Orangeburg, SC (44) Executive Officer, Executive Officer, First National Bank
and Director and First National Corporation; 1991
to 1994, President, Rock Hill National
Bank and Rock Hill National Bank
Corporation; 1990 to 1991, Executive
Vice President, Rock Hill National
Bank.

Robert H. Jennings, III Director Bank-1963 Retired in 1994 as Chairman of the
Orangeburg, SC (71) FNC-1985 Board, First National Corporation and
First National Bank; Retired President,
Palmetto Baking Company - Bakery
products.

Edward V. Mirmow, Jr. Director Bank-1983 Retired Attorney (since 1991).
Orangeburg, SC (65) FNC-1985

Larry D. Westbury Chairman of 1986 Chairman of the Board, First National
Orangeburg, SC (63) the Board Bank and First National Corporation
since 1994; Retired in 1994 as
President and Chief Executive Officer
First National Corporation and First
National Bank.
</TABLE>

EXECUTIVE COMPENSATION

The following table summarizes for the years indicated current and
long-term compensation and stock related compensation for C. John Hipp, III, the
only executive officer of FNC and its subsidiary, First National Bank, whose
total salary and bonus for the year ended December 31, 1995 exceeded $100,000.

<PAGE>

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

Long Term
Annual Compensation
Compensation Awards
------------ ------

Executive Officer and Number of Securities All Other
Principal Position Year Salary(1) Bonus(2) Underlying Options(3) Compensation(4)
------------------ ---- --------- -------- --------------------- ---------------

<S> <C> <C> <C> <C> <C>
C. John Hipp, III, 1995 $146,018 $6,000 6,050 $1,815
President and Chief 1994(5) 97,794 6,000 5,500 -0-
Executive Officer 1993(6) N/A N/A N/A N/A
- -------------------
</TABLE>

(1) Perquisites and personal benefits did not exceed the lesser of $50,000 or
10% of total salary plus bonus.

(2) Figures shown represent actual cash bonuses paid during the year indicated.
First National Bank maintains an incentive compensation plan known as the
Employee Incentive Compensation Plan ("Plan"). Amounts payable under the
Plan are based on First National Corporation's performance in terms of its
Return on Equity (ROE) for any calendar year. The First National Bank
Executive Committee sets performance goals for FNC at the beginning of any
calendar year. The Board of Directors of FNC, however, has the discretion
to change during any year the performance goals, payment amounts and other
requirements of the Plan. The Plan creates an "incentive pool" determined
by multiplying a certain percentage of First National Bank income over a
stated percentage ROE for the calendar year in question. Amounts paid into
the incentive pool are distributed to participating employees based on the
individual employee's merit and salary level.

(3) Figures shown represent the number of shares of FNC stock subject to
options awarded to the named executive officer during the years indicated.

(4) Includes $1,450 contributed by First National Bank through matching or
discretionary contributions to its Employee Savings Plan and allocated to
the named executive officer's accounts, and $365 of term life insurance
premiums paid by First National Bank for the benefit of the named executive
officer. The Employee Savings Plan is a "tax qualified" plan under Section
401(a) of the Internal Revenue Code and covers all First National Bank
employees.

(5) Mr. Hipp's employment commenced in April, 1994. Accordingly, his
compensation for 1994 covered only nine months.

(6) Mr. Hipp was not employed by FNC or any of its subsidiaries in 1993.

Employment Agreements

In March, 1994, C. John Hipp, III, entered into an Employment Agreement
with FNC providing for his employment as President and Chief Executive Officer
of First National Bank. The term of the agreement began May 1, 1994, and ends
April 30, 1997, with provision for Mr. Hipp's continued employment at will after
April 30, 1997. The agreement provides for compensation for Mr. Hipp at the 1994
level or a greater rate set by the Board of Directors of FNC or by a committee
appointed by the Board of Directors, plus fringe benefits and reimbursement of
expenses. Under the terms of the agreement, Mr. Hipp has also been granted
options to purchase up to a total of 5,000 (before adjustments for 10% stock
dividends paid on each of November 30, 1994 and November 30, 1995) shares of
FNC's common stock under the terms and conditions of First National
Corporation's Incentive Stock Option Plan of 1992. In the event of Mr. Hipp's
termination prior to April 30, 1997 without cause, Mr. Hipp will be entitled to
continued compensation at the rate then in effect until April 30, 1997. In the
event that Mr. Hipp's employment is terminated for any reason by either Mr. Hipp
or FNC prior to April 30, 1997, following a sale or merger (as defined in the
agreement), Mr. Hipp will be entitled to continued compensation at the rate then

<PAGE>

in effect until April 30, 1997. In the event of termination of Mr. Hipp's
employment because of death or disability prior to April 30, 1997, Mr. Hipp (or
his estate) will be entitled to be paid his then current salary for a period of
one year from the date of such termination. If Mr. Hipp's employment is
terminated for any reason by either Mr. Hipp or by FNC after April 30, 1997 and
prior to April 30, 2004, following a sale or merger, Mr. Hipp will be entitled
to continued compensation at the rate then in effect for a period of three years
or until April 30, 2004, whichever period is shorter. In the event of Mr. Hipp's
termination after April 30, 1997 and prior to April 30, 2004 without cause or
because of death or disability, Mr. Hipp (or his estate) will be entitled to be
paid his then current salary for a period of one year from the date of such
termination. Upon termination without cause, after a sale or merger, or after
disability, however, Mr. Hipp is under an affirmative obligation for one year
following termination to actively seek and accept comparable alternative
employment, and any compensation received by him or earnable by him with
reasonable diligence following such termination will be deducted from amounts
owed to him by FNC under the Agreement.

In May 1996, Robert R. Hill, Jr., entered into an employment agreement with
FNC providing for his employment as President and Chief Executive Officer of the
National Bank of York County. The term of the Agreement began May 10, 1996 and
ends May 10, 1999, with provision for Mr. Hill's continued employment at will
after May 10, 1999. The Agreement provides for base compensation, reimbursement
of expenses, participation in insurance, pension, profit-sharing and bonus
programs as are available generally to senior officers of the National Bank of
York County, club membership dues, and an automobile. The Agreement also
provides that Mr. Hill will be considered by FNC for participation in the 1996
Stock Option Plan. In the event of termination of Mr. Hill's employment without
cause prior to May 10, 1999, Mr. Hill will be entitled to continued compensation
at the rate then in effect until May 10, 1999. In the event of termination of
employment by Mr. Hill for any reason, he will not be entitled to any further
compensation or benefits under the Agreement. In the event that Mr. Hill's
employment is terminated for any reason by FNC on or prior to May 10, 1999,
following a sale or merger (as defined in the Agreement), Mr. Hill will be
entitled to continued compensation at the rate then in effect until May 10,
1999. Mr. Hill's employment may be terminated by FNC upon notice in writing if
Mr. Hill has been unable to discharge the duties and obligations under the
Agreement by reason of illness, accident or disability for a period of six
consecutive months. The Agreement may also be terminated by FNC in the event of
certain wrongful conduct by Mr. Hill. In the event of termination for such
wrongful conduct, all future compensation and benefits, not then accrued, will
automatically terminate. The Agreement automatically terminates in the event of
Mr. Hill's death. In the event of termination without cause, after a sale or
merger, or by FNC without cause, Mr. Hill is under an affirmative obligation for
one year following termination to actively seek and accept comparable
alternative employment, and any compensation received by him or earnable by him
with reasonable diligence following such termination will be deducted from
amounts owed to him by FNC under the Agreement.

Restricted Stock Plan

FNC has entered into a Restricted Stock Agreement with C. John Hipp, III,
President and Chief Executive Officer of FNC. The Agreement grants to Mr. Hipp
5,185 shares of restricted common stock. The grant is conditioned upon continued
employment of Mr. Hipp as Chief Executive Officer of FNC at each vesting date as
follows: a) 25% of the shares vest free of restrictions in 1999; b) an
additional 25% of the shares vest free of restrictions in 2001; and c) the
remaining 50% of the shares vest free of restrictions in 2003. Termination of
Mr. Hipp's employment as Chief Executive Officer for any reason (except death or
change in control of FNC) prior to a vesting date would terminate any interest
in non-vested shares. Prior to vesting of the shares, as long as Mr. Hipp
remains Chief Executive Officer of FNC, he will have the right to vote such
shares and to receive dividends paid with respect to such shares. All restricted
shares will fully vest in the event of change in control (as defined in the
Restricted Stock Agreement) of First National Bank or upon death of Mr. Hipp
while serving as Chief Executive Officer.

INFORMATION PERTAINING TO STOCK OPTION PLANS

1992 Plan

FNC's Incentive Stock Option Plan of 1992 was adopted by the Board of
Directors on March 12, 1992, and was duly approved by shareholders of FNC on
April 28, 1992. The Plan reserves 50,000 shares of Common Stock for issuance

<PAGE>

pursuant to the exercise of options that may be granted under the Plan. Options
under the Plan are incentive stock options within the meaning of Section 422 of
the Internal Revenue Code, and may be granted to key employees in full time
employment of FNC or First National Bank. The Stock Option Committee, which is
appointed by the Board of Directors of FNC, selects the employees to receive
grants under the Plan and determines the number of shares to be covered by the
options granted. Options granted under the Plan may not be exercised in whole or
in part within one year following the date of grant of the options, and
thereafter become exercisable in 25% increments over the next four years. The
exercise price ofthe options may not be less than fair market value of the
Common Stock on the date of grant. In the event of an acquisition or change in
control of FNC or First National Bank, any options already granted will
automatically become 100% vested. The options expire five years following grant.
No options were granted to any named executive officer of FNC during 1995.

1996 Plan

The Board of Directors of FNC adopted the 1996 Incentive Stock Option Plan
on February 8, 1996, and the Plan was approved by shareholders of FNC on April
23, 1996. The 1996 Incentive Stock Option Plan reserves 73,000 shares of Common
Stock for issuance pursuant to the exercise of options which may be granted
pursuant to the 1996 Incentive Stock Option Plan. The 1996 Incentive Stock
Option Plan will become effective March 14, 1996, subject to stockholder
approval, and will terminate March 14, 2001, unless terminated earlier by the
Board of Directors. Options under the 1996 Incentive Stock Option Plan will be
"incentive stock options" within the meaning of the Internal Revenue Code and
may be granted to persons who are employees of FNC or any subsidiary (including
officers and directors who are employees) at the time of grant and who are, or
are expected to be, primarily responsible for the management, growth or
protection of some part or all of the business of FNC or any subsidiary. The
1996 Incentive Stock Option Plan will be administered by a Committee of not
fewer than three directors of FNC appointed by the Board of Directors. All
options must have an exercise price not less than the fair market value of the
Common Stock at the date of grant, as determined by the Committee. The Committee
may set other terms for the exercise of the options but may not grant to any
person more than $100,000 of options (based on the fair market value of the
optioned shares on the date of the grant of the option) which first become
exercisable in any calendar year. The Committee also selects the employees to
receive grants under the 1996 Incentive Stock Option Plan and determines the
number of shares covered by options granted under the 1996 Incentive Stock
Option Plan. Options granted pursuant to the 1996 Incentive Stock Option Plan
will not be exercisable for one year following grant, and thereafter become
exercisable in 25% increments over the next four years. No options may be
exercised after five years from the date of grant; options may not be
transferred except by will or the laws of descent and distribution; and options
may be exercised only (i) while the optionee is an employee of FNC, (ii) within
the earlier of five years from the date of grant or three months after the date
of termination of employment, (iii) within the earlier of five years from the
date of grant or two years after death, (iv) within the earlier of five years
from the date of grant or one year after disability, or (v) in case of
termination for good cause (as defined by the plan), immediately upon
termination.

The number and kind of shares that are available for issuance pursuant to
the 1996 Incentive Stock Option Plan and that are subject to any options and the
option price per share shall be adjusted in the event of any merger,
consolidation, stock dividend, split-up, combination or exchange of shares or
recapitalization or change in capitalization. Upon the occurrence of certain
changes in control of FNC or its subsidiaries all options outstanding under the
1996 Incentive Stock Option Plan will become immediately exercisable.
Furthermore, upon the proposal of an acquisition, merger, or change of control,
the Committee may, at its sole discretion, issue all remaining options
authorized under the 1996 Incentive Stock Option Plan.

The following table shows aggregated options exercised under the 1992 Plan
during 1995 and year end 1995 option values.

<PAGE>

<TABLE>
<CAPTION>
AGGREGATED OPTIONS EXERCISED DURING 1995 AND YEAR END 1995 OPTION VALUES

Options Exercised During Number and Value of Unexercised
1995 Options at Year End
---- -------------------

Number of Securities
Shares Underlying Value of Unexercised
Acquired or Value Unexercised In-the-Money
Executive Officer Exercised Realized Options(1) Options(2)
----------------- --------- -------- ---------- ----------

<S> <C> <C> <C> <C>
C. John Hipp, III. -0- -0- Unexercised: 6,050 Unexercised: $48,884
Exercisable: 1,512 Exercisable: $12,221
Unexercisable: 4,538 Unexercisable: $36,663
</TABLE>

Notes:

(1) Figures shown represent the total number of shares subject to unexercised
options held by the indicated executive officer at year end 1995. The
number of shares subject to options which were exercisable and
unexercisable at year end 1995 are also shown. The number of options
granted under the plan have been adjusted to reflect a stock dividend of
10% paid on November 30, 1994, and a stock dividend of 10% paid on November
30, 1995.

(2) Dollar amounts shown represent the value of stock options held by the
indicated executive officers at year end 1995. Only those shares subject to
options which are "in the money" are reported. Shares subject to an option
are considered to be "in the money" if the fair market value at year-end
1995 of such shares of FNC's Common Stock exceeds the exercise or base
price of such shares. At year end 1995, FNC's stock price exceeded the
exercise price of all shares subject to option, thus all stock options were
considered "in the money." For those options "in the money," value is
computed based on the difference between the fair market value of FNC
Common Stock at year end 1995 and the exercise or base price of the shares
subject to underlying option. The value of shares subject to options
exercisable and unexercisable at year end 1995 is also shown.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

The Compensation Committee for the year ended December 31, 1995, was
composed of William B. Cox, Chairman, C. Parker Dempsey, A. Dewall Waters, Larry
D. Westbury and C. John Hipp, III. Mr. Hipp is currently President and Chief
Executive Officer of FNC and First National Bank, and Mr. Westbury is currently
Chairman of the Board of FNC and is a former President and Chief Executive
Officer of FNC and First National Bank. Although Mr. Hipp specifically excluded
himself from any Compensation Committee discussions concerning his own
compensation, he did participate in discussions concerning the compensation of
other executive officers.

OTHER BENEFIT PROGRAMS - DEFINED BENEFIT PENSION PLAN

First National Bank maintains a noncontributory, defined benefit pension
plan ("Pension Plan") covering its employees, including executive officers. The
Pension Plan is a "tax qualified" plan under Section 401(a) of the Internal
Revenue Code and must also comply with provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").

The pension table below shows estimated annual benefits payable upon
retirement to persons in the specified remuneration and years of service
categories as if retirement had occurred on December 31, 1995. The benefits
shown are computed on a single life only annuity basis.

<PAGE>

<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS UNDER FIRST NATIONAL BANK'S PENSION PLAN
YEARS OF SERVICE

FAC* 10 20 30 40
------ ---- ---- ---- ---

<S> <C> <C> <C> <C> <C>
$ 30,000 $ 2,965 $ 5,930 $ 8,896 $10,378
40,000 4,515 9,030 13,546 15,803
50,000 6,065 12,130 18,196 21,228
60,000 7,615 15,230 22,846 26,653
70,000 9,165 18,330 27,496 32,078
80,000 10,715 21,430 32,146 37,503
90,000 12,265 24,530 36,796 42,928
100,000 13,815 27,630 41,446 48,353
110,000 15,365 30,730 46,096 53,778
120,000 16,915 33,830 50,746 59,203

</TABLE>

*FAC: Final Average Compensation, computed as the average amount of a
participant's compensation earned over the last 60 months prior to his
or her retirement date or early termination of employment.

Benefits. Upon a participant's retirement at his normal retirement date
(age 65), a monthly retirement benefit will be paid in accordance with Pension
Plan provisions. The amount of such monthly retirement benefit will equal 1/12
of the sum of (i) and (ii) as follows: (i) .90% of the Pension Plan
participant's final average compensation multiplied by his years of credited
service up to a maximum of 35 years; and (ii) .65% of the Pension Plan
participant's final average compensation in excess of his covered compensation
multiplied by his years of credited service up to a maximum of 35 years. For
purposes of the above formula, a participant's final average compensation
consists of the average amount of a participant's compensation earned over the
last 60 months prior to early or normal retirement. In addition, a participant
is credited with one year of credited service under the Pension Plan for each
year in which 1,000 or more hours are worked. Benefits under the Pension Plan
are not subject to deduction for Social Security or other offset amounts.

Compensation Under the Pension Plan. For purposes of computing a
participant's final average compensation, the Pension Plan uses the following
definition of participant compensation: W-2 earnings, including bonuses,
overtime and commissions, but excluding employer contributions to employee
benefit plans, as limited by Internal Revenue Code Section 401(a)(17).

Information as to Executive Officer Participation. For purposes of
executive officer participation in the Pension Plan, the executive officer
compensation used for purposes of computing executive officer benefits under the
Pension Plan is the same as that shown in the Summary Compensation Table. As of
December 31, 1995, the named Company and First National Bank executive officer
had accumulated the following years of credited service toward retirement: C.
John Hipp, III, 2 years of credited service.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

First National Bank has loan and deposit relationships with some of the
directors of FNC and First National Bank and with companies with which the
directors are associated as well as with members of the immediate families of
the directors ("Affiliated Persons"). (The term "members of the immediate
families" for purposes of this paragraph includes each person's spouse, parents,
children, siblings, mothers and fathers-in-law, sons and daughters-in-law, and
brothers and sisters-in-law.) Loans to Affiliated Persons were made in the
ordinary course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not, at the time they were
made involve more than the normal risk of collectibility or present other
unfavorable features.

<PAGE>

Director Robert R. Horger is a partner in the law firm of Horger, Barnwell
& Reid, which First National Bank has retained as general counsel during the
past five years. First National Bank proposes to retain the firm during the
current fiscal year.

DESCRIPTION OF FNC COMMON STOCK

Authorized Capital. FNC is authorized to issue 5,000,000 shares of common
stock, $5.00 par value per share, of which 2,247,636 shares were issued and
outstanding as of March 31, 1996. A total of 60,000 additional shares were
reserved as of such date for potential issuance in connection with certain
employee stock option plans. Pursuant to the provisions of the South Carolina
Business Corporation Act of 1988 (the "Business Corporation Act"), any
outstanding shares of capital stock of FNC reacquired by it would be considered
authorized but unissued shares.

Voting and Other Rights. The holders of FNC Common Stock are entitled to
one vote per share on each matter voted on at a shareholders' meeting. A
majority of the shares entitled to vote, represented at a meeting in person or
by proxy, constitutes a quorum, and, in general, most routine matters will be
approved if the votes cast in favor of the matter exceed the votes against the
matter. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present. Each
shareholder entitled to vote in such an election shall be entitled to vote each
share of FNC Common Stock owned by such shareholder for as many persons as there
are directors to be elected. Pursuant to the Articles of Incorporation of FNC,
shareholders do not have cumulative voting rights.

In general, (i) amendments to FNC's Articles of Incorporation must be
approved by two-thirds of the votes entitled to be cast, regardless of voting
group, and in addition by two-thirds of the votes entitled to be cast within
each voting group entitled to vote separately thereon; and (ii) the dissolution
of FNC must be approved by two-thirds of the votes entitled to be cast thereon.

The Articles of Incorporation of FNC provide that a merger, exchange or
consolidation of FNC with, or the sale, exchange or lease of all or
substantially all of the assets of FNC to, any person or entity (referred to
herein as a "Fundamental Change"), must be approved by the holders of at least
80% of the outstanding voting stock of FNC if the Board of Directors does not
recommend a vote in favor of the Fundamental Change. The Articles of
Incorporation further provide that a Fundamental Change involving a shareholder
that owns or controls 20% or more of the voting stock of FNC at the time of the
proposed transaction (a "Controlling Party") must be approved by the holders of
at least (i) 80% of the outstanding voting stock of FNC, and (ii) 67% of the
outstanding voting stock of FNC held by shareholders other than the Controlling
Party, unless (x) the transaction has been recommended to the shareholders by a
majority of the entire Board of Directors or (y) the consideration per share to
be received by the shareholders of FNC generally is not less than the highest
price per share paid by the Controlling Party in the acquisition of its holdings
of the FNC Common Stock during the preceding three years. The approval by the
holders of at least 80% of the outstanding voting stock of FNC is required to
amend or repeal these provisions contained in FNC's Articles of Incorporation.
Finally, in the event that any such Fundamental Change is not recommended by the
Board of Directors, the holders of at least 80% of the outstanding voting stock
of FNC must attend a meeting called to address such transaction, in person or by
proxy, in order for a quorum for the conduct of business to exist. If the 80%
and 67% vote requirements described above do not apply because the Board of
Directors recommends the transaction or the consideration is deemed fair, as
applicable, then pursuant to the provisions of the Business Corporation Act, the
Fundamental Change generally must be approved by two-thirds of the votes
entitled to be cast with respect thereto.

The Articles of Incorporation of FNC provide that the shareholders of FNC
may act to amend or repeal any of FNC's Bylaws upon the approval of the holders
of at least 80% of the outstanding voting stock of FNC. The Bylaws generally may
also be amended or repealed upon the vote of a majority of the Board of
Directors; provided, however, that pursuant to the Business Corporation Act, the
shareholders in adopting, amending or repealing a Bylaw may provide expressly
that the Board of Directors may not adopt, amend or repeal that Bylaw or any
Bylaw on that subject.

The shareholders of FNC shall have dissenters' rights to an appraisal with
respect to their shares of FNC Common Stock as provided by the Business
Corporation Act in connection with certain types of merger or share exchange
transactions. Dissenters' rights generally are also available with respect to
certain sales of all or substantially all of the property of FNC and certain
amendments to FNC's Articles of Incorporation that materially and adversely
affect certain enumerated rights of a dissenter's shares.

<PAGE>

Directors and Classes of Directors. Under FNC's Articles of Incorporation
and Bylaws and pursuant to the Business Corporation Act, the number of directors
shall consist of a minimum of six and a maximum of 20 persons. This number may
be determined from time to time by the shareholders or the Board of Directors.
Accordingly, either the directors or the shareholders of FNC have the authority
to increase or decrease the number of directors, which is currently fixed at 20,
within this maximum. Only the shareholders of FNC, however, have the right to
change the range for the size of the Board, by amendment to FNC's Articles of
Incorporation.

The Board of Directors of FNC is divided into three classes so that each
director serves for a term ending on the date of the third annual meeting
following the annual meeting at which such director was elected. In the event of
any increase in the authorized number of directors, the newly created
directorships resulting from such increase shall be apportioned among the three
classes of directors so as to maintain such classes as nearly equal as possible.
Because of the classification of directors, unless the shareholders act under
the Business Corporation Act to remove directors from office, two annual
meetings generally would be required to elect a majority of the Board of
Directors and three, rather than one, would be required to replace the entire
board. The provisions of the Articles of Incorporation providing for the
classified Board of Directors can be amended or repealed only upon the
affirmative vote of the holders of at least 80% of the outstanding voting stock
of FNC.

The Articles of Incorporation provide that a director may be removed with
or without cause by the affirmative vote of at least 80% of the outstanding
voting stock.

Consideration of Non-Shareholder Interests. The Articles of Incorporation
of FNC provide that, when evaluating any proposed plan of merger, consolidation,
exchange or sale of all, or substantially all, of the assets of FNC, the Board
of Directors shall consider the interests of the employees of FNC and the
community or communities in which FNC and its subsidiaries, if any, do business
in addition to the interest of FNC's shareholders.

Anti-Takeover Aspects of Certain Provisions. The provisions of FNC's
Articles of Incorporation regarding the staggered Board of Directors and
Fundamental Change vote requirements as well as the other high vote
requirements, and provisions regarding consideration of non-shareholder
interests with respect to certain types of transactions may have certain
anti-takeover effects with respect to FNC, and may be deemed to present an
impediment to a change in control of FNC even if such a change were favored by a
majority of the shareholders. Such provisions could make FNC a less attractive
target for a hostile takeover bid or render more difficult or discourage a
merger proposal, the assumption of control through the acquisition of a large
block of FNC Common Stock or the removal of incumbent management. Such
provisions may inhibit or impede fluctuations in the market price of the FNC
Common Stock, which might otherwise result from actual or potential takeover
attempts.

Liquidation Rights. In the event of liquidation, the holders of FNC Common
Stock would be entitled to receive pro rata any assets legally available for
distribution to shareholders with respect to shares held by them.

Preemptive and Other Rights. The FNC Common Stock does not have any
preemptive rights, redemption privileges, sinking fund privileges or conversion
rights. All the outstanding shares of FNC Common Stock are validly issued, fully
paid and nonassessable. The FNC Common Stock is traded in the over-the-counter
market. First Union National Bank acts as transfer agent and registrar for the
FNC Common Stock. As of January 18, 1996, there were approximately 1,718
shareholders of record of FNC.

Distributions. FNC may issue share dividends in FNC Common Stock to the
holders of shares of FNC Common Stock. In addition, the holders of shares of FNC
Common Stock will be entitled to receive such other distributions as the Board
of Directors of FNC may declare, subject to any restrictions contained in FNC's
Articles of Incorporation (of which there currently are none), unless after
giving effect to such distribution, (i) FNC would not be able to pay its debts
as they become due in the usual course of business or (ii) FNC's total assets
would be less than the sum of FNC's total liabilities plus the amount that would
be needed, if FNC were to be dissolved at the time of the distribution, to
satisfy claims of shareholders who have preferential rights superior to the
rights of holders of FNC Common Stock.

Although FNC is not subject to the restrictions on dividends applicable to
national banks, the ability of FNC to make distributions to holders of FNC
Common Stock is dependent to a large extent upon the ability of its subsidiary
bank, First National Bank (and, upon completion of its organization, National
Bank of York County), to pay dividends. The ability of First National Bank, as
well as of FNC, to pay dividends in the future may also be affected by the
various minimum capital requirements. See "SUPERVISION AND REGULATION."

<PAGE>

Indemnification of Officers and Directors. FNC's Bylaws provide that FNC
shall advance expenses to and indemnify its current or former directors,
officers, agents or employees to the full extent and in the manner permitted or
required by the Business Corporation Act. Sections 33-8-500 through 33-8-580 of
the Business Corporation Act contain provisions prescribing the extent to which
directors and officers shall or may be indemnified. Section 33-8-510 permits a
corporation, with certain exceptions, to indemnify a current or former director
against liability if (i) he conducted himself in good faith, (ii) he reasonably
believed (x) that his conduct in his official capacity with the corporation was
in its best interest and (y) his conduct in other capacities was at least not
opposed to the corporation's best interest, and (iii) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. A corporation may not indemnify a current or former director in
connection with a proceeding by or in the right of the corporation in which he
was adjudged liable to the corporation or in connection with a proceeding
charging improper personal benefit to him. The above standard of conduct is
determined by the Board of Directors or a committee thereof or special legal
counsel or the shareholders as prescribed in Section 33-8-550.

Sections 33-8-520 and 33-8-560 require a corporation to indemnify a
director or officer in the defense of any proceeding to which such person was a
party because of his or her capacity as officer or director against reasonable
expenses when such person is wholly successful in his or her defense, unless the
Articles of Incorporation provide otherwise. Upon application, the court may
order indemnification of the director or officer if such person is adjudged
fairly and reasonably so entitled under Section 33-8-540. Section 33-8-560
allows a corporation to indemnify and advance expenses to an officer, employee
or agent who is not a director to the same extent as a director or as otherwise
set forth in the corporation's Articles of Incorporation or Bylaws or by
resolution of the Board of Directors or by contract.

Limitation of Director Liability. The Articles of Incorporation of FNC
provide that no director of FNC shall be personally liable to FNC or its
shareholders for monetary damages for breach of such director's fiduciary duty
as a director except for (i) any breach of the director's duty of loyalty to FNC
or its shareholders; (ii) acts or omissions not in good faith or that involve
gross negligence, intentional misconduct or a knowing violation of law; (iii)
certain unlawful distributions; and (iv) any transaction from which such
director derived an improper personal benefit.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of FNC pursuant to the foregoing provisions, or otherwise, FNC has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

Statutory Matters.

Business Combination Statute. The South Carolina business combinations
statute provides that a 10% or greater shareholder of a resident domestic
corporation cannot engage in a "business combination" (as defined in the
statute) with such corporation for a period of two years following the date on
which the 10% shareholder became such, unless the business combination or the
acquisition of shares is approved by a majority of the disinterested members of
such corporation's board of directors before the 10% shareholder's share
acquisition date. This statute further provides that at no time (even after the
two-year period subsequent to such share acquisition date) may the 10%
shareholder engage in a business combination with the relevant corporation
unless certain approvals of the board of directors or disinterested shareholders
are obtained or unless the consideration given in the combination meets certain
minimum standards set forth in the statute. The law is very broad in its scope
and is designed to inhibit unfriendly acquisitions but it does not apply to
corporations whose articles of incorporation contain a provision electing not to
be covered by the law. FNC's articles of incorporation do not contain such a
provision. An amendment of the articles of incorporation to that effect will,
however, permit a business combination with an interested shareholder even
though that status was obtained prior to the amendment.

Control Share Acquisitions. South Carolina law also contains provisions
that, under certain circumstances, would preclude an acquiror of the shares of a
South Carolina corporation who crosses one of three voting thresholds (20%,
331/3% or 50%) from obtaining voting rights with respect to such shares unless a
majority in interest of the disinterested shareholders of the corporation votes
to accord voting power to such shares.

The legislation provides that, if authorized by the articles of
incorporation or bylaws prior to the occurrence of a control share acquisition,
the corporation may redeem the control shares for their fair value if the
acquiring person has not complied with certain procedural requirements
(including the filing of an "acquiring person statement" with the corporation
within 60

<PAGE>

days after the control share acquisition) or if the control shares are not
accorded full voting rights by the shareholders. FNC is not authorized by its
articles or bylaws to redeem control shares pursuant to such legislation.

General. Taken together, the foregoing provisions of the Articles of
Incorporation and South Carolina law favor maintenance of the status quo and may
make it more difficult to change current management, and may impede a change of
control of FNC even if desired by a majority of its shareholders.

SUPERVISION AND REGULATION

Bank holding companies and banks are extensively regulated under federal
and state law. To the extent that the following information describes statutory
and regulatory provisions, it is qualified in its entirety by reference to such
statutes and regulations. Any change in applicable law or regulation may have a
material effect on the business of FNC and the Banks.

Regulation of Bank Holding Companies

General

As a bank holding company registered under the Bank Holding Company Act
("BHCA"), FNC is subject to the regulations of the Federal Reserve. Under the
BHCA, FNC's activities and those of its subsidiaries are limited to banking,
managing or controlling banks, furnishing services to or performing services for
its subsidiaries or engaging in any other activity which the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. The BHCA prohibits FNC from acquiring direct
or indirect control of more than 5% of the outstanding voting stock or
substantially all of the assets of any bank or from merging or consolidating
with another bank holding company without prior approval of the Federal Reserve.
The BHCA also prohibits FNC from acquiring control of any bank operating outside
the State of South Carolina unless such action is specifically authorized by the
statutes of the state where the Bank to be acquired is located.

Additionally, the BHCA prohibits FNC from engaging in or from acquiring
ownership or control of more than 5% of the outstanding voting stock of any
company engaged in a non-banking business unless such business is determined by
the Federal Reserve to be so closely related to banking as to be properly
incident thereto. The BHCA generally does not place territorial restrictions on
the activities of such non-banking related activities.

FNC is also registered under the South Carolina Bank Holding Company Act
(the "SCBHCA"). Accordingly, FNC is subject to regulation and supervision by the
State Board.

A registered South Carolina bank holding company must provide the State
Board with information with respect to the financial condition, operations,
management and inter-company relationships of the holding company and its
subsidiaries. The State Board also may require such other information as is
necessary to keep itself informed about whether the provisions of South Carolina
law and the regulations and orders issued thereunder by the State Board have
been complied with, and the State Board may examine any bank holding company and
its subsidiaries.

Under the SCBHCA, it is unlawful without the prior approval of the State
Board for any South Carolina bank holding company (i) to acquire direct or
indirect ownership or control of more than 5% of the voting shares of any bank
or any other bank holding company, (ii) to acquire all or substantially all of
the assets of a bank or any other bank holding company, or (iii) to merge or
consolidate with any other bank holding company.

Obligations of Holding Company to its Subsidiary Banks

Under the policy of the Federal Reserve, a bank holding company is required
to serve as a source of financial strength to its subsidiary depository
institutions and to commit resources to support such institutions in
circumstances where it might not do so absent such policy. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("1991 Banking Law"), to
avoid receivership of its insured depository institution subsidiary, a bank
holding company is required to guarantee the compliance of any insured
depository institution subsidiary that may become "undercapitalized" with the
terms of any capital restoration plan filed by such subsidiary with its
appropriate federal banking agency up to the lesser of (i) an amount equal to 5%
of the institution's total assets at the time the institution became
undercapitalized, or (ii) the amount which is necessary (or would have been
necessary) to bring the institution into compliance with all applicable capital
standards as of

<PAGE>

the time the institution fails to comply with such capital restoration plan.
Under the BHCA, the Federal Reserve has the authority to require a bank holding
company to terminate any activity or to relinquish control of a nonbank
subsidiary (other than a nonbank subsidiary of a bank) upon the Federal
Reserve's determination that such activity or control constitutes a serious risk
to the financial soundness and stability of any bank subsidiary of the Bank
holding company.

In addition, the "cross-guarantee" provisions of the Federal Deposit
Insurance Act, as amended ("FDIA"), require insured depository institutions
under common control to reimburse the FDIC for any loss suffered or reasonably
anticipated by either the Savings Association Insurance Fund ("SAIF") or the
Bank Insurance Fund ("BIF") of the FDIC as a result of the default of a commonly
controlled insured depository institution or for any assistance provided by the
FDIC to a commonly controlled insured depository institution in danger of
default. The FDIC may decline to enforce the cross-guarantee provisions if it
determines that a waiver is in the best interest of the SAIF or the BIF or both.
The FDIC's claim for damages is superior to claims of stockholders of the
insured depository institution or its holding company but is subordinate to
claims of depositors, secured creditors and holders of subordinated debt (other
than affiliates) of the commonly controlled insured depository institutions.

The FDIA also provides that amounts received from the liquidation or other
resolution of any insured depository institution by any receiver must be
distributed (after payment of secured claims) to pay the deposit liabilities of
the institution prior to payment of any other general or unsecured senior
liability, subordinated liability, general creditor or stockholder. This
provision would give depositors a preference over general and subordinated
creditors and stockholders in the event a receiver is appointed to distribute
the assets of the Banks.

Any capital loans by a bank holding company to any of its subsidiary banks
are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.

Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the Bank's shareholders', pro rata, and to the
extent necessary, if any such assessment is not paid by any shareholder after
three months notice, to sell the stock of such shareholder to make good the
deficiency.

Capital Adequacy Guidelines for Bank Holding Companies and National Banks

The various federal bank regulators, including the Federal Reserve and the
OCC, have adopted risk-based capital requirements for assessing bank holding
company and bank capital adequacy. These standards define what qualifies as
capital and establish minimum capital standards in relation to assets and
off-balance sheet exposures, as adjusted for credit risks. Capital is classified
into two tiers. For bank holding companies, Tier 1 or "core" capital consists
primarily of common shareholders' equity, perpetual preferred stock (subject to
certain limitations) and minority interests in the common equity accounts of
consolidated subsidiaries, and is reduced by goodwill and certain investments in
other corporations ("Tier 1 Capital"). Tier 2 capital consists of the allowance
for possible loan losses (subject to certain limitations), and certain
subordinated debt, "hybrid capital instruments", subordinated and perpetual debt
and intermediate term and other preferred stock ("Tier 2 Capital"). A minimum
ratio of total capital to risk-weighted assets of 8.00% is required and Tier 1
capital must be at least 50% of total capital. The Federal Reserve also has
adopted a minimum leverage ratio of Tier 1 Capital to total assets (not
risk-weighted) of 3%. The 3% Tier 1 Capital to total assets ratio constitutes
the leverage standard for bank holding companies and national banks, and will be
used in conjunction with the risk-based ratio in determining the overall capital
adequacy of banking organizations.

The Federal Reserve and the OCC have emphasized that the foregoing
standards are supervisory minimums and that an institution would be permitted to
maintain such levels of capital only if it had a composite rating of "1" under
the regulatory rating systems for bank holding companies and banks. All other
bank holding companies are required to maintain a leverage ratio of 3% plus at
least 1% to 2% of additional capital. These rules further provide that banking
organizations experiencing internal growth or making acquisitions will be
expected to maintain capital positions substantially above the minimum
supervisory levels and comparable to peer group averages, without significant
reliance on intangible assets. The Federal Reserve continues to consider a
"tangible Tier 1 leverage ratio" in evaluation proposals for expansion or new
activities. The tangible Tier 1 leverage ratio is the ratio of a banking
organization's Tier 1 Capital less all intangibles, to total assets, less all
intangibles. The Federal Reserve has not advised the Company of any specific
minimum leverage ratio applicable to it.

<PAGE>

As of December 31, 1995, the Company and First National Bank have leverage
ratios of 9.1%; and 8.1% respectively, and total risk adjusted capital ratios of
16.6%; and 15.0%, respectively.

Bank regulators from time to time indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
However, the management of FNC is unable to predict whether and when higher
capital requirements would be imposed and, if so, at what levels and on what
schedule.

Recent Regulations and Proposals Relating to Capital Adequacy

The 1991 Banking Law required each federal banking agency, including the
Federal Reserve, to revise its risk-based capital standards to ensure that those
standards take adequate account of interest rate risk, concentration of credit
risk and the risks of non-traditional activities, as well as reflect the actual
performance and expected risk of loss on multi-family mortgages. The Federal
Reserve, the FDIC and the OCC have issued a joint rule amending the capital
standards to specify that the banking agencies will include in their evaluations
of a bank's capital adequacy an assessment of the exposure to declines in the
economic value of the bank's capital due to changes in interest rates. The
agencies have also issued for comment a proposed joint policy statement that
describes the process the banking agencies will use to measure and assess the
exposure of a bank's net economic value to changes in interest rates. The
banking agencies have also indicated that, through a subsequent rulemaking
process, they intend to issue a proposed rule that would establish an explicit
capital charge for interest rate risk based on the level of a bank's measured
interest rate risk exposure.

The Federal Reserve, the FDIC, the OCC and the Office of Thrift Supervision
have also issued a joint rule amending the risk-based capital guidelines to take
account of concentration of credit risk and the risk of non-traditional
activities. The rule amends each agency's risk-based capital standards by
explicitly identifying concentration of credit risk and the risk arising from
other sources, as well as an institution's ability to manage these risks, as
important factors to be taken into account by the agency in assessing an
institution's overall capital adequacy.

FNC is still assessing the impact these rules and proposed policy statement
would have on the capital requirements of the Bank or FNC.

Payment of Dividends

FNC is a legal entity separate and distinct from the Banks. Most of the
revenues of FNC are expected to result from dividends paid to FNC by the Banks.
There are statutory and regulatory requirements applicable to the payment of
dividends by subsidiary banks as well as by FNC to its shareholders.

Each national banking association is required by federal law to obtain the
prior approval of the OCC for the payment of dividends if the total of all
dividends declared by the board of directors of such bank in any year will
exceed the total of (i) such bank's net profits (as defined and interpreted by
regulation) for that year plus (ii) the retained net profits (as defined and
interpreted by regulation) for the preceding two years, less any required
transfers to surplus. In addition, national banks can only pay dividends to the
extent that retained net profits (including the portion transferred to surplus)
exceed bad debts (as defined by regulation). In 1990, the OCC issued a
regulation that redefines certain of the terms and methods of calculation used
in these two dividend restrictions. The rule, among other things, changed the
methodology of calculating net profits to be more consistent with GAAP with the
result that provisions for possible credit losses cannot be added back to net
income and charge-offs cannot be deducted from net income in calculating the
level of net profits available for the payment of dividends. The regulation has
not thus far had a material effect on the ability of First National Bank to pay
dividends to FNC.

The payment of dividends by FNC and the Banks may also be affected or
limited by other factors, such as the requirements to maintain adequate capital
above regulatory guidelines. In addition, if, in the opinion of the applicable
regulatory authority, a bank under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial
condition of the Banks, could include the payment of dividends), such authority
may require, after notice and hearing, that such bank cease and desist from such
practice. The OCC has indicated that paying dividends that deplete a national
bank's capital base to an inadequate level would be an unsafe and unsound
banking practice. The Federal Reserve, the OCC and the FDIC have issued policy
statements which provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.

<PAGE>

Certain Transactions by FNC with its Affiliates

There are various legal restrictions on the extent to which bank holding
companies and their nonbank subsidiaries can borrow or otherwise obtain credit
from their bank subsidiaries. An insured bank and its subsidiaries are limited
in engaging in "covered transactions" with their nonbank affiliates to the
following amounts: (i) in the case of any such affiliate, the aggregate amount
of covered transactions of the insured bank and its subsidiaries will not exceed
10% of the capital stock and surplus of the insured bank and (ii) in the case of
all affiliates, the aggregate amount of covered transactions of the insured bank
and its subsidiaries will not exceed 20% of the capital stock and surplus of the
bank. "Covered transactions" are defined by statute to include a loan or
extension of credit, as well as a purchase of securities issued by an affiliate,
a purchase of assets (unless otherwise exempted by the Federal Reserve), the
acceptance of securities issued by the affiliate as collateral for a loan and
the issuance of a guarantee, acceptance, or letter of credit on behalf of an
affiliate. Further, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.

FDIC Insurance Assessments

Because First National Bank's deposits are, and the National Bank of York
County's deposits will be, insured by the BIF, the Banks are subject to
insurance assessments imposed by the FDIC. Under current law, the insurance
assessment to be paid by BIF-insured institutions is as specified in a schedule
issued by the FDIC that specifies, at semiannual intervals, target reserve
ratios designed to maintain the FDIC insurance funds' reserve ratios at 1.25% of
estimated insured deposits (or such higher ratio as the FDIC may determine in
accordance with the statute) in 15 years. Further, the FDIC is authorized to
impose one or more special assessments in any amount deemed necessary to enable
repayment of amounts borrowed by the FDIC from the United States Department of
the Treasury ("Treasury Department").

Effective January 1, 1996, the FDIC implemented a risk-based assessment
schedule, imposing assessments ranging from 0.00% to 0.27% of an institution's
average assessment base. The minimum annual assessment under the schedule is
$2,000 per institution. The actual assessment to be paid by each BIF member is
based on the institution's assessment risk classification, which is determined
based on whether the institution is considered "well capitalized," "adequately
capitalized" or "undercapitalized," as such terms have been defined in
applicable federal regulations adopted to implement the prompt corrective action
provisions of the 1991 Banking Law (see "---Other Safety and Soundness
Regulations"), and whether such institution is considered by its supervisory
agency to be financially sound or to have supervisory concerns. First National
Bank's risk-based assessment is currently set at the minimum $2,000 annual
assessment.

The FDIC may increase or decrease the new assessment rates semiannually up
to a maximum increase or decrease of 5 basis points, as deemed necessary to
maintain the BIF reserve ratio at $1.25 per $100 of insured deposits.

Regulation of the Banks

First National Bank is, and the National Bank of York County will be, also
subject to examination by the OCC bank examiners. In addition, First National
Bank is, and the National Bank of York County will be, subject to various other
state and federal laws and regulations, including state usury laws, laws
relating to fiduciaries, consumer credit and laws relating to branch banking.
First National Bank's loan operations also are, and the National Bank of York
County's loan operations will be, subject to certain federal consumer credit
laws and regulations promulgated thereunder, including, but not limited to: the
federal Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers; the Home Mortgage Disclosure Act, requiring financial institutions to
provide certain information concerning their mortgage lending; the Equal Credit
Opportunity Act and the Fair Housing Act, prohibiting discrimination on the
basis of certain prohibited factors in extending credit; the Fair Credit
Reporting Act, governing the use and provision of information to credit
reporting agencies; the Bank Secrecy Act, dealing with, among other things, the
reporting of certain currency transactions; and the Fair Debt Collection Act,
governing the manner in which consumer debts may be collected by collection
agencies. The deposit operations of First National Bank also are, and the
deposit operations of the National Bank of York County will be, subject to the
Truth in Savings Act, requiring certain disclosures about rates paid on savings
accounts; the Expedited Funds Availability Act, which deals with disclosure of
the availability of funds deposited in accounts and the collection and return of
checks by banks; the Right to Financial Privacy Act, which imposes a duty to
maintain certain confidentiality of consumer financial records and the
Electronic Funds Transfer Act and regulations promulgated thereunder, which
govern 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.

<PAGE>

First National Bank is also, and the National Bank of York County will be,
subject to the requirements of the Community Reinvestment Act (the "CRA"). The
CRA imposes on financial institutions an affirmative and ongoing obligation to
meet the credit needs of their local communities, including low- and
moderate-income neighborhoods, consistent with the safe and sound operation of
those institutions. Each financial institution's efforts in meeting community
credit needs are evaluated as part of the examination process, and also are
considered in evaluating mergers, acquisitions and applications to open a branch
or facility.

The federal banking agencies, including the OCC, have recently issued a
joint rule that changes the method of evaluating an institution's CRA
performance. The new rule evaluates institutions based on their actual
performance (rather than efforts) in meeting community credit needs. Subject to
certain exceptions, the OCC assesses the CRA performance of a bank by applying
lending, investment and service tests. The lending test evaluates a bank's
record of helping to meet the credit needs of its assessment area through its
lending activities by considering a bank's home mortgage, small business, small
farm, community development, and consumer lending. The investment test evaluates
a bank's record of helping to meet the credit needs of its assessment area
through qualified investments that benefit its assessment area or a broader
statewide or regional area that includes the bank's assessment area. The service
test evaluates a bank's record of helping to meet the credit needs of its
assessment area by analyzing both the availability and effectiveness of a bank's
systems for delivering retail banking services and the extent and innovativeness
of its community development services. The OCC assigns a rating to a bank of
"outstanding," satisfactory," "needs to improve," or "substantial noncompliance"
based on the bank's performance under the lending, investment and service tests.
To evaluate compliance with the tests, subject to certain exceptions, banks will
be required to collect and report to the OCC extensive demographic and loan
data.

For banks with total assets of less than $250 million that are affiliates
of a holding company with banking and thrift assets of less than $1 billion,
such as the Banks and FNC, the OCC evaluates the bank's record of helping to
meet the credit needs of its assessment area pursuant to the following criteria:
(1) the bank's loan-to-deposit ratio, adjusted for seasonal variation and, as
appropriate, other lending-related activities, such as loan originations for
sale to the secondary markets, community development loans, or qualified
investments; (2) the percentage of loans and, as appropriate, other
lending-related activities located in the bank's assessment area; (3) the bank's
record of lending to and, as appropriate, engaging in other lending-related
activities for borrowers of different income levels and businesses and farms of
different sizes; (4) the geographic distribution of the bank's loans; and (5)
the bank's record of taking action, if warranted, in response to written
complaints about its performance in helping to meet credit needs in its
assessment area. Small banks may also elect to be assessed under the generally
applicable standards of the rule, but to do so a small bank must collect and
report extensive data.

A bank may also submit a strategic plan to the OCC and be evaluated on its
performance under the plan.

Other Safety and Soundness Regulations

Prompt Corrective Action. The federal banking agencies have broad powers
under current federal law to take prompt corrective action to resolve problems
of insured depository institutions. The extent of these powers depends upon
whether the institutions in question are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" or
"critically undercapitalized." Under uniform regulations defining such capital
levels issued by each of the federal banking agencies, a bank is considered
"well capitalized" if it has (i) a total risk-based capital ratio of 10% or
greater, (ii) a Tier 1 risk-based capital ratio of 6% or greater, (iii) a
leverage ratio of 5% or greater and (iv) is not subject to any order or written
directive to meet and maintain a specific capital level. An "adequately
capitalized" bank is defined as one that has (i) a total risk-based capital
ratio of 8% or greater, (ii) a Tier 1 risk-based capital ratio of 4% or greater
and (iii) a leverage ratio of 4% or greater (or 3% or greater in the case of a
bank that has a composite CAMEL rating of 1 and is not experiencing or
anticipating significant growth). A bank is considered (A) "undercapitalized" if
it has (i) a total risk-based capital ratio of less than 8%, or (ii) a Tier 2
risk-based capital ratio of less that 4%, and (iii) a leverage ratio of less
than 4% (or 3% in the case of a bank that has a composite CAMEL rating of 1 and
is not experiencing or anticipating significant growth); (B) "significantly
undercapitalized" if the bank has (i) a total risk-based capital ratio of less
than 6%, or (ii) a Tier 1 risk-based capital ratio of less than 3%; or (iii) a
leverage ratio of less than 3%; and (C) "critically undercapitalized" if the
bank has a ratio of tangible equity to total assets equal to or less than 2%.

A bank that is "undercapitalized" becomes subject to provisions of the FDIA
restricting payment of capital distributions and management fees; requiring OCC
to monitor the condition of the bank; requiring submission by the bank of a
capital restoration plan; restricting the growth of the bank's assets and
requiring prior approval of certain expansion proposals. A bank that is
"significantly undercapitalized" is also subject to restrictions on compensation
paid to senior

<PAGE>

management of the bank, and a bank that is "critically undercapitalized" is
further subject to restrictions on the activities of the bank and restrictions
on payments of subordinated debt of the bank. The purpose of these provisions is
to require banks with less than adequate capital to act quickly to restore their
capital and to have the OCC move promptly to take over banks that are unwilling
or unable to take such steps.

Brokered Deposits. Under current FDIC regulations, "well capitalized" banks
may accept brokered deposits without restriction, "adequately capitalized" banks
may accept brokered deposits with a waiver from the FDIC (subject to certain
restrictions on payment of rates), while "undercapitalized" banks may not accept
brokered deposits. The regulations provide that the definitions of "well
capitalized", "adequately capitalized" and "undercapitalized" are the same as
the definitions adopted by the agencies to implement the prompt corrective
action provisions of the 1991 Banking Law (described in the previous paragraph).
FNC does not believe that these regulations will have a material adverse effect
on its operations.

Recent Regulations. The 1991 Banking Law also required each of the federal
banking agencies to develop regulations addressing certain safety and soundness
standards for insured depository institutions and depository institution holding
companies, including operational and managerial standards, asset quality,
earnings and stock valuation standards, as well as compensation standards (but
not dollar levels of compensation). On September 23, 1994, the Riegle Community
Development and Regulatory Improvement Act of 1994 amended the 1991 Banking Law
to authorize the agencies to establish safety and soundness standards by
regulation or by guideline. Accordingly, the federal banking agencies have
recently issued Interagency Guidelines Establishing Standards for Safety and
Soundness, which set forth general operational and managerial standards in the
areas of internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth and
compensation, fees and benefits. The Guidelines also prohibit payment of
excessive compensation as an unsafe and unsound practice. Compensation is
defined as excessive if it is unreasonable or disproportionate to the services
actually performed. Bank holding companies are not subject to the Guidelines.
The Guidelines contemplate that each federal agency will determine compliance
with these standards through the examination process, and if necessary to
correct weaknesses, require an institution to file a written safety and
soundness compliance plan. FNC does not expect the Guidelines to materially
change current operations of First National Bank or have a material adverse
effect on anticipated operations of the National Bank of York County.

Interstate Banking

In July 1994, South Carolina enacted legislation which effectively provides
that, after September 30, 1996, out-of-state bank holding companies (including
bank holding companies in the Southern Region, as defined under the statute) may
acquire other banks or bank holding companies having offices in South Carolina
upon the approval of the South Carolina State Board of Financial Institutions
and assuming compliance with certain other conditions, including that the effect
of the transaction not lessen competition and that the laws of the state in
which the out-of-state bank holding company filing the applications has its
principal place of business permit South Carolina bank holding companies to
acquire banks and bank holding companies in that state. Although such
legislation may increase takeover activity in South Carolina, FNC does not
believe that such legislation will have a material impact on its competitive
position. However, no assurance of such fact may be given.

Congress recently enacted the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, which will increase the ability of bank holding
companies and banks to operate across state lines. Under the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994, the existing
restrictions on interstate acquisitions of banks by bank holding companies will
be repealed one year following enactment, such that FNC and any other bank
holding company located in South Carolina would be able to acquire a bank
located in any other state, and a bank holding company located outside South
Carolina could acquire any South Carolina-based bank, in either case subject to
certain deposit percentage and other restrictions. The legislation also provides
that, unless an individual state elects beforehand either (i) to accelerate the
effective date or (ii) to prohibit out-of-state banks from operating interstate
branches within its territory, on or after June 1, 1997, adequately capitalized
and managed bank holding companies will be able to consolidate their multistate
bank operations into a single bank subsidiary and to branch interstate through
acquisitions. De novo branching by an out-of-state bank would be permitted only
if it is expressly permitted by the laws of the host state. The authority of a
bank to establish and operate branches within a state will continue to be
subject to applicable state branching laws. FNC believes that this legislation
may result in additional acquisitions of South Carolina financial institutions
by out-of-state financial institutions. However, FNC does not presently
anticipate that such legislation will have a material impact on its operations
or future plans.

<PAGE>

Legislative Proposals

The Treasury Department has issued a proposal to consolidate the federal
bank regulatory agencies. Under this proposal, most of the supervisory and
regulatory oversight authority of the FDIC, the OCC, the OTS and the Federal
Reserve would be transferred to a new independent federal banking agency. The
FDIC would continue to have oversight over the deposit insurance funds and the
Federal Reserve would continue to carry out monetary and fiscal policy, discount
window operations and payments system functions. The Treasury Department is
expected to seek to introduce a bill in Congress providing for such
consolidation in the near future. However, the plan already is opposed by the
Federal Reserve, which has proposed a competing consolidation plan that would
preserve its regulatory oversight authority. Due to the preliminary nature of
the proposal and opposition by industry groups and others, FNC cannot determine
at this time the effect of any regulatory consolidation.

Other proposed legislation which could significantly affect the business of
banking has been introduced or may be introduced in Congress from time to time.
FNC cannot predict the future course of such legislative proposals or their
impact on FNC should they be adopted.

Fiscal and Monetary Policy

Banking is a business which depends to a large extent on interest rate
differentials. In general, the difference between the interest paid by a bank on
its deposits and its other borrowings, and the interest received by a bank on
its loans and securities holdings, constitutes the major portion of a bank's
earnings. Thus, the earnings and growth of FNC are subject to the influence of
economic conditions generally, both domestic and foreign, and also to the
monetary and fiscal policies of the United States and its agencies, particularly
the Federal Reserve. The Federal Reserve regulates the supply of money through
various means, including open-market dealings in United States government
securities, the discount rate at which banks may borrow from the Federal
Reserve, and the reserve requirements on deposits. The nature and timing of any
changes in such policies and their impact on FNC cannot be predicted.

EXPERTS

The consolidated balance sheets of FNC as of December 31, 1995, 1994 and
1993, and the related consolidated statements of income and cash flows for each
of the years then ended, and changes in shareholders' equity for the three-year
period ended December 31, 1995, included in FNC's Annual Report on Form 10-K for
the year ended December 31, 1995 have been audited by J.W. Hunt and Company,
LLP, independent public accountants, as indicated in their report with respect
thereto, dated January 20, 1995, and are incorporated by reference herein in
reliance upon the authority of J.W. Hunt and Company, LLP, as experts in
accounting and auditing.

LEGAL MATTERS

The validity of the Common Stock offered hereby and certain legal matters
in connection with the offering will be passed upon for FNC by Sinkler & Boyd,
P.A., Columbia, South Carolina, special counsel to FNC.

<PAGE>

APPENDIX A
INFORMATION ABOUT THE ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 1995

The FNC Annual Report to Shareholders for the year ended December 31, 1995,
portions of which are incorporated by reference in the Prospectus, is being
delivered herewith. If you did not receive a copy of the Annual Report, please
contact W. Louis Griffith, Chief Financial Officer, First National Corporation,
345 John C. Calhoun Drive, S.E., Orangeburg, South Carolina 29115, (803)
531-0527.

<PAGE>

APPENDIX B
INFORMATION ABOUT THE QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996

The FNC Quarterly Report on Form 10-Q for the quarter ended March 31, 1996,
portions of which are incorporated by reference in the Prospectus, is being
delivered herewith. If you did not receive a copy of the Quarterly Report,
please contact W. Louis Griffith, Chief Financial Officer, First National
Corporation, 345 John C. Calhoun Drive, S.E., Orangeburg, South Carolina 29115,
(803) 531-0527.

<PAGE>

APPENDIX C
SUBSCRIPTION AGREEMENT

<PAGE>

FIRST NATIONAL CORPORATION
SUBSCRIPTION AGREEMENT

The undersigned, having received and reviewed the Prospectus (the
"Prospectus") dated _________________, of First National Corporation ("FNC"),
the Annual Report to Shareholders for the Year Ended December 31, 1995, and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, subject to
the terms and conditions of the Prospectus, hereby subscribes for the number of
shares of Common Stock, of FNC, shown below. The undersigned tenders herewith
the purchase price of $27.00 per share to FNC. All payments shall be in United
States dollars in cash or by check, draft or money order drawn to the order of
First National Bank, as Escrow Agent for First National Corporation (prior to
commencement of banking operations by the National Bank of York County) or to
First National Corporation (after commencement of banking operations by the
National Bank of York County).

Your Properly Completed Subscription Form and Payment Must Be Returned To:

FIRST NATIONAL CORPORATION OR FIRST NATIONAL CORPORATION
345 John C. Calhoun Drive, S.E. Post Office Box 3186
Orangeburg, South Carolina 29115 Rock Hill, South Carolina 29732
(803) 531-0527 Attention: W. Louis Griffith
Attention: W. Louis Griffith

OR FIRST NATIONAL CORPORATION
Post Office Box 1287
Orangeburg, South Carolina 29116-1287
Attention: W. Louis Griffith

Acknowledgments and Representations

In connection with this subscription, the undersigned hereby acknowledges
and agrees that:

(1) This subscription may not be cancelled, terminated, or revoked by the
undersigned before August 21, 1997. Upon acceptance in writing by FNC, the
Subscription will be binding and legally enforceable until April 1, 1997.
This subscription will only be deemed accepted upon agreement thereto by
the President or Chairman of the Board of FNC. No other person has
authority to accept or reject a subscription on behalf of FNC.

(2) FNC reserves the right to accept this subscription in whole or in part. If
this subscription is accepted in part, the undersigned agrees to purchase
the accepted number of shares subject to all of the terms of this offer.

(3) All funds relating to this subscription received by FNC prior to
commencement of operations by the National Bank of York County will be held
in escrow by First National Bank, as escrow agent, and will be deposited in
certificates of deposit or other deposit accounts. Any interest accruing on
such funds will be the property of FNC and the undersigned expressly waives
all claims thereto. Any subscription funds relating to accepted
subscriptions received after commencement of banking operations by the
National Bank of York County will be paid directly to FNC and a stock
certificate will be issued by FNC to the subscriber for the number of
shares as to which the subscription has been accepted.

(4) FNC reserves the right to cancel this subscription after acceptance until
the date of issue of the Common Stock.

(5) If this subscription is cancelled in whole or in part, the corresponding
portion of any funds received by FNC relating to this subscription shall be
promptly returned to the undersigned, and, should the National Bank of York
County fail to commence operations by August 21, 1997, all such funds shall
be promptly returned to the undersigned. No interest will be paid on any
such returned funds.

(6) The shares of Common Stock subscribed for hereby are equity securities and
are not savings accounts or deposits, and INVESTMENT THEREIN IS NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.

(7) This subscription is nonassignable and nontransferable, except with the
written consent of FNC.

(8) Certificates will be delivered by first class mail to the address set forth
herein.

(9) The undersigned has received a copy of the Prospectus, the Annual Report to
Shareholders for the Year Ended December 31, 1995, and the Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, and represents that this
Subscription Agreement is made solely on the basis of the information
contained in such documents and is not made in reliance on any inducement,
representation or statement not contained in such documents. No person
(including any Officer or Director of FNC or organizer of the National Bank
of York County) has authority to give any information or to make any
representation not contained in the Prospectus, the Annual Report to
Shareholders for the Year Ended December 31, 1995, or the Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, and if given or made,
such information or representation must not be relied upon as having been
authorized.

I wish to subscribe for the following shares of Common Stock:

Number of Shares I want to buy is
____________ Shares x $27.00 = $_____________*

My payment of that amount is enclosed.

*If this amount is more or less than the correct amount for the number of shares
shown or as to which the subscription is accepted, I want to buy as many shares
as this amount will buy at $27.00 per share.

- --------------------------------------------------------------------------------
(Name(s) in which stock certificates should be registered**)

- --------------------------------------------------------------------------------
(Street Address)

- --------------------------------------------------------------------------------
(City/State/Zip Code)

- --------------------------------------------------------------------------------
(Social Security or Employer I.D. No.)

(____)_______________ (____)____________________
(Home Telephone No.) (Business Telephone No.)

**Stock certificates for shares to be issued in the names of two or more persons
will be registered in the names of such persons as joint tenants with right of
survivorship, and not as tenants in common.

SUBSTITUTE W-9

Under the penalties of perjury, I certify that: (1)
the Social Security number or taxpayer
identification number given above is correct; and
(2) I am not subject to backup withholding.
INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF YOU
HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE
THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE
OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.

I HAVE READ AND UNDERSTAND THE PROSPECTUS AND THIS SUBSCRIPTION AGREEMENT.

- ------------------------------- ----------------------------------------
(Signature) (Date)

If shares are to be held in joint ownership, all joint owners should
sign this Agreement.

<PAGE>

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

SEC registration fee and blue sky filing fees...........................$ 4,000
Accounting fees......................................................... 5,000
Legal fees and expenses................................................. 25,000
Mailing and Printing Costs.............................................. 14,000
Miscellaneous........................................................... 2,000
TOTAL..........................................................$50,000

Item 15. Indemnification of Directors and Officers.

Under South Carolina law, Section 33-8-510, Code of Laws of South
Carolina 1976, as amended, a corporation has the power to indemnify directors
and officers who meet the standards of good faith and reasonable belief that
conduct was lawful and in the corporate interest (or not opposed thereto) set
forth in such statute. Such statute also empowers a corporation to provide
insurance for directors and officers against liability arising out of their
positions even though the insurance coverage is broader than the power of the
corporation to indemnify. Under Section 33-8-520, unless limited by its articles
of incorporation, a corporation must indemnify a director or officer who is
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director against reasonable
expenses incurred by him in connection with the proceeding. The registrant's
Articles of Incorporation do not provide otherwise.

Item 16. Exhibits.

See Exhibit Index below.

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is

<PAGE>

incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.

(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement on Form S-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Orangeburg, State of South Carolina, on
May 29, 1996.

FIRST NATIONAL CORPORATION

s/C. John Hipp, III
By:------------------------
C. John Hipp, III
Its Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-2 has been signed by the following persons in
the capacities indicated.

Signature Title Date

s/Charles W. Clark*
Director May 29, 1996
(Charles W. Clark)

s/W. B. Cox, Jr.*
Director May 29, 1996
(W. B. Cox, Jr.)

s/C. Parker Dempsey*
Director May 29, 1996
(C. Parker Dempsey)

s/Clarence F. Evans*
Director May 29, 1996
(Clarence F. Evans)

s/E. Everett Gasque, Jr.*
Director May 29, 1996
(E. Everett Gasque, Jr.)

s/John L. Gramling, Jr.*
Director May 29, 1996
(John L. Gramling, Jr.)

s/W. Louis Griffith May 29, 1996
Chief Financial Officer
(W. Louis Griffith) (Principal Accounting Officer)

s/C. John Hipp, III May 29, 1996
President, Chief Executive
(C. John Hipp, III) Officer and Director

s/Robert R. Horger*
Director May 29, 1996
(Robert R. Horger)

s/R. H. Jennings, III*
Director May 29, 1996
(R. H. Jennings, III)

s/J. C. McAlhany*
Director May 29, 1996
(J. C. McAlhany)

<PAGE>

s/Dick Gregg McTeer*
Director May 29, 1996
(Dick Gregg McTeer)

s/Harry M. Mims, Jr.*
Director May 29, 1996
(Harry M. Mims, Jr.)

s/E. V. Mirmow, Jr.*
Director May 29, 1996
(E. V. Mirmow, Jr.)

s/M. Maceo Nance, Jr.*
Director May 29, 1996
(M. Maceo Nance, Jr.)

s/Anne H. Oswald*
Director May 29, 1996
(Anne H. Oswald)

s/James W. Roquemore*
Director May 29, 1996
(James W. Roquemore)

s/James E. Sulton, Sr.*
Director May 29, 1996
(James E. Sulton, Sr.)

s/Johnny E. Ward*
Director May 29, 1996
(Johnny E. Ward)

s/A. Dewall Waters*
Director May 29, 1996
(A. Dewall Waters)

s/L. D. Westbury*
Director May 29, 1996
(L. D. Westbury)

*By W. Louis Griffith
Attorney-in-Fact

<PAGE>

EXHIBIT INDEX

Exhibit No. (per Exhibit
Table in Item 601 of
Regulation S-K) Description of Exhibit
- --------------- ----------------------

<S> <C> <C>
5 Opinion of Sinkler & Boyd, P.A.

10.1 First National Corporation Incentive Stock Option Plan of
1992 (incorporated by reference to exhibits filed with
Registration Statement on Form S-4, Registration No. 33-
52052).

10.2 First National Corporation Executive Incentive
Compensation Plan (incorporated by reference to exhibits
filed with Registration Statement on Form S-4,
Registration No. 33-52052).

10.3 First National Corporation Dividend Reinvestment Plan
(incorporated by reference to exhibits filed with
Registration Statement on Form S-8, Registration No. 33-
58692).

10.4 First National Corporation Incentive Stock Option Plan of
1996 (incorporated by reference to Registrant's Definitive
Proxy Statement filed in connection with its 1996 Annual
Meeting of Shareholders).

10.5 Employment Agreement between the Registrant and C.
John Hipp, III, dated May 1, 1994 (incorporated by
reference to exhibits filed with Annual Report on Form
10-K for the year ended December 31, 1995).

10.6 Organizational Agreement, dated as of September 27,
1995, among the Organizers of The National Bank of
York County and Registrant (incorporated by reference to
exhibits filed with Annual Report on Form 10-K for the
year ended December 31, 1995).

10.7 Restricted Stock Agreement between the Registrant and
C. John Hipp, dated March 28, 1996 (incorporated by
reference to exhibits filed with Quarterly Report on Form
10-Q for the quarter ended March 31, 1996).

10.8 Employment Agreement between the Registrant and
Robert R. Hill, Jr., dated May 10, 1996.

13.1 Portions of the 1995 Annual Report to Shareholders
incorporated by reference in Registration Statement
(Incorporated by reference to Exhibit 13 to Annual Report on
Form 10-K for the year ended December 31, 1996).

13.2 Quarterly Report on Form 10-Q for the quarter ended March 31,
1996 (Incorporated by reference to Quarterly Report on Form
10-Q for the quarter ended March 31, 1996).

21 Subsidiaries of the Registrant (incorporated by reference
to exhibits filed with Registration Statement on Form
S-4, Registration No. 33-52052).

23.1 Consent of J. W. Hunt & Company, LLP.

23.2 Consent of Sinkler & Boyd, P.A. (Included in Exhibit 5)

24 Power of Attorney.

</TABLE>

Sinkler & Boyd, P.A.
Attorneys at Law
The Palmetto Center
1426 Main Street, Suite 1200
Columbia, South Carolina 29201
(803) 779-3080

May 29, 1996

First National Corporation
345 John C. Calhoun Drive, S.E.
Orangeburg, South Carolina 29115

Gentlemen:

In connection with the registration under the Securities Act of 1933 (the
"Act") of the offering of 170,000 shares of the common stock, no par value (the
"Common Stock"), of First National Corporation, a South Carolina corporation
(the "Company"), we have examined such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.

Upon the basis of such examination, it is our opinion that the Common
Stock, when issued upon the terms and conditions set forth in the Registration
Statement filed by the Company in connection with the registration of the
offering of the Common Stock, and upon receipt of the consideration therefor,
will be legally issued, fully paid and nonassessable.

We consent to be named in the Registration Statement as attorneys who will
pass upon certain legal matters in connection with the offering described in the
Registration Statement, and to the filing of a copy of this opinion as an
exhibit to the Registration Statement. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.

Very truly yours,

Sinkler & Boyd, P.A.

NOTICE: THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO
SECTION 15-48-10 Of S.C. CODE OF LAWS 1976 (AS AMENDED).

STATE OF SOUTH CAROLINA,
EMPLOYMENT AGREEMENT
COUNTY OF ORANGEBURG.

THIS AGREEMENT, dated and effective this 10th day of May, 1996, between
First National Corporation, a corporation organized and existing under the laws
of the State of South Carolina (the "Corporation"), and Robert R. Hill, Jr. (the
"Executive").

WHEREAS, the Corporation desires to employ the Executive;

WHEREAS, Executive desires to be employed by the Corporation on the terms
and subject to the conditions hereinafter set forth;

NOW, THEREFORE, in consideration of mutual covenants contained herein, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties do mutually agree as follows:

1. Employment and Term. The Corporation will employ Executive, and
Executive will be employed by the Corporation for a period beginning May 10,
1996, and ending May 10, 1999. After the expiration of this Agreement the
Executive, if still in the employment of the Corporation, shall become an
employee at-will.

2. Duties. Executive shall at all times faithfully and diligently perform
his obligations under this Agreement and act in the best interests of the
Corporation and its affiliated companies. Executive's duties hereunder shall be
to act in such office or capacity as the Corporation may direct or change from
time to time; however, no change shall involve a material reduction in duties,
responsibility, or title unless written notice is provided

<PAGE>

at least thirty (30) days before such change shall become effective, and
Executive shall perform all duties necessary or advisable in order to carry out
such functions in an efficient manner. Executive shall at all times devote his
full time, best efforts and ability, skill, and attention exclusively to the
furtherance of the business objectives and interests of the Corporation and its
affiliated companies, all to the exclusion of other employers or interests or
their products and services. Executive shall not engage in any gainful
employment other than under this Agreement during its term without the prior
written consent of the Corporation's Board of Directors, provided however, that
Executive may buy or sell investments and securities for his personal account.

3. Compensation.

(a) Compensation. For services rendered by Executive hereunder, the
Corporation shall pay Executive a salary of $7,083.00 per month provided,
however, that the Executive's salary may be increased by the Board of Directors
of the Corporation or the Committee (as described in paragraph 7) in its
discretion.

(b) Reimbursement of Expenses. The Corporation shall in accordance with
Corporation's policy pay or reimburse Executive for all reasonable travel and
other expenses incurred by Executive in performing his obligations under this
Agreement.

<PAGE>

(c) Executive shall be entitled to such insurance, pension, profit-sharing
or bonus programs as are or may be available generally to senior officers of the
Corporation's subsidiary National Bank of York County.

(d) Executive will be considered by the Corporation or appropriate
committees of the Corporation under the Corporation's 1996 Stock option Plan.
Levels of participation in the plan are solely within the discretion of the
committee administering the plan or the Board of Directors of the Corporation.

(e) Executive shall be entitled to reasonable time off for sick leave,
bereavement leave, jury duty and military obligations as are or may become
available to senior officers of the Corporation, and up to three (3) weeks of
vacation, or as may be provided for in the Corporation's vacation schedule,
during each year of employment during the contract period.

(f) Corporation will pay on behalf of Executive the dues for the Executive
required to maintain membership in the Country Club of Rock Hill. (g)
Corporation will provide to Executive an automobile to be used by Executive in
performing his duties hereunder.

4. Executive's Responsibility. Executive at the beginning of employment
with the Corporation shall be named as President and Chief Executive Officer of
National Bank of York County, Rock Hill, South Carolina.

<PAGE>

5. Termination. Employment may be terminated under any of the following
provisions.

(a) The employment of the Executive under this Agreement may be terminated
without cause or reason by the Board or Committee of the Corporation, In the
event of termination under this paragraph, Corporation shall pay to the
Executive his then current salary, as described in Paragraph 3(a), for the
remainder of the three year period of this Agreement ending May 10, 1999.

(b) The employment of the Executive under this Agreement may be terminated
by the Executive for whatever reason with or without cause upon thirty (30) days
written notice. In the event of such termination by the Executive, Executive
shall be entitled to no compensation or benefits under this Agreement upon the
termination of his employment.

(c) The employment of the Executive under this Agreement may be terminated
by the Board or Committee of the Corporation upon notice in writing if the
Executive has been unable to discharge the duties and obligations hereunder by
reason of illness, accident or disability for a period of six (6) consecutive
months.

(d) The employment of the Executive under this Agreement may be terminated
immediately by the Board or Committee of the Corporation if the Board or
Committee finds that the Executive shall have (i) been guilty of a material or
willful breach of the terms of this Agreement, (ii) demonstrated gross
negligence, impropriety or willful misconduct in the execution of his duties,
(iii) has been charged or convicted of a felony or other serious

<PAGE>

crime, (iv) participated in conduct in violation of any federal or state
statute, rule or regulation, or (v) participated in conduct in violation of any
policy (including but not limited to ethical policy) of the Corporation or any
of its subsidiaries or which materially interferes with the performance of
Executive's duties hereunder. All future compensation and benefits, not then
accrued, will automatically terminate if Executive is terminated under this
paragraph.

(e) The employment of Executive under this Agreement shall be automatically
terminated on the date of the Executive's death.

(f) Termination Following a Sale or Merger of Corporation. If a sale or
merger of Corporation as defined herein occurs and the employment of the
Executive is terminated for any reason thereafter by the Corporation prior to
end of the term of employment specified in Paragraph 1, the Corporation shall
continue to provide the Executive his then current salary as specified in
Paragraph 3(a) until the expiration of this contract (May 10, 1999).

A sale or merger of the Corporation means a sale or merger of 50% or more
of the shares of First National Corporation wherein First National Corporation
is not the surviving entity.

6. Post-Termination Obligations. All payments and benefits to Executive
under this Agreement shall be subject to Executive's compliance with the
following provisions during the term of this

<PAGE>

Agreement and for one full year after the expiration or termination hereof:

(a) Assistance in Litigation. Executive shall, upon reasonable notice,
furnish such information and proper assistance to the Corporation as may
reasonably be required by the Corporation in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.

(b) If termination is pursuant to Paragraphs 5(a) or 5(f), the Executive is
under an affirmative duty to actively seek and accept comparable alternative
employment following his termination. Any compensation received by Executive
following termination or compensation earnable with reasonable diligence will be
deducted from any further compensation due the Executive under this Agreement.
In the event Executive fails to seek comparable alternative employment, the
Corporation's obligations to pay future compensation and for benefits
continuation shall cease.

(c) Confidential Information. Executive acknowledges that in the course of
his employment he will acquire knowledge of trade and business secrets and other
confidential data of the Corporation, its subsidiaries and any affiliated
companies. Such trade and business secrets and other confidential data may
include, but are not limited to, confidential product information, methods by
which the Corporation proposes to compete with its business competitors,
strategic plans, confidential reports prepared by business consultant(s) and
similar information relating to the Corporation's, its subsidiaries' or its
affiliated companies'

<PAGE>

products, customers, and operations. Executive covenants not to knowingly
disclose or reveal to any unauthorized person such confidential business secrets
or other confidential data both during the term of this Agreement and at all
times following this termination. Executive recognizes that the possible
restrictions on his activities are required for the reasonable protection of the
Corporation.

(d) Covenants For Protection of the Corporation. During the term of this
Agreement and for a period of one (1) year following the termination of this
Agreement, Executive separately covenants for the benefits of the Corporation as
follows:

(i) Executive shall not, directly or indirectly, promote, participate
or engage in any activity or business which is in competition with the
business of the Corporation, or any of its subsidiaries and affiliated
companies, including but not limited to commercial banking, lending,
and other similar activities or services, whether directly or
indirectly (as a director, shareholder or investor, partner, lessor,
lessee, proprietor, principal agent, independent contractor,
representative, consultant, or otherwise), within the existing
market(s), [as defined in Paragraph 11(e)]. Ownership by Executive of
5% or less of the outstanding capital stock of any corporation which
is actively publicly traded will not be a violation of this covenant.

(ii) To the extent that Executive's duties have caused him to have
direct contacts with customers of the Corporation on a frequent and
recurring basis, Executive covenants not to engage in any of the
activities listed in clause (i) of this paragraph within the existing
market(s) [as defined in Paragraph 11(e)].

(iii)Executive covenants that he will not employ or assist others by
active solicitation to recruit and employ employees of the Corporation
or any subsidiaries and affiliate companies; and

<PAGE>

(iv) Executive agrees that he will not, directly or indirectly, on
behalf of himself or any third party, make any sales contacts with, or
actively solicit business from any customer of the Corporation or its
subsidiaries and affiliate companies, for any products or services
competitive with those offered by the Corporation or its affiliated
companies within the existing market(s) [as defined in Paragraph
11(e)].

However, the aforesaid limitations on Executive shall be null and void if
Executive is terminated after at least fifty percent (50%) stock ownership of
Corporation has been acquired by one entity or a combination of affiliated
entities (that is, a buy-out type event has occurred), as described in Paragraph
5(f).

(e) It is further understood and agreed that the Corporation's right to
require Executive to keep confidential information secret or not to compete
against the Corporation for the agreed upon period shall not be in lieu of the
Corporation's right to monetary damages in the event Executive is in breach of
any obligation contained in this Agreement, and that in the event of a breach of
this Agreement Corporation may either, with or without pursuing any action for
damages, obtain and enforce an injunction prohibiting Executive from violating
said covenants.

(f) The parties hereby agree that all restrictions are reasonable in
nature, designed to reasonably protect the Corporation's interest and do not
violate public policy.

7. Decisions by Corporation. Any powers granted to the Board hereunder may
be exercised by a committee appointed by the Board (the "Committee"), and such
Committee, if appointed, shall have general responsibility for the
administration and

<PAGE>

interpretation of this Agreement including determinations of compensation. If
the Board or the Committee shall find that any person to whom any amount is or
was payable hereunder is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then the Board or the Committee, if it so
elects, may direct that any payment due him or his estate (unless a prior claim
therefore has been made by a duly appointed legal representative) or any part
thereof be paid or applied for the benefit of such person or to or for the
benefit of such person's spouse, children or other dependents, an institution
maintaining or having custody of such person, any other person deemed by the
Board or the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment, or any of them in such manner and proportion as
the Board or the Committee may deem proper. Any such payment shall be in
complete discharge of the liability of the Corporation therefor.

8. Arbitration. Executive and Corporation agree that any claim, action, or
controversy arising out of or relating to this Agreement, or breach thereof,
shall be settled pursuant to the Uniform Arbitration as codified in Section
15-48-10, et. seq. of the South Carolina Code of Laws 1976, as amended, and any
judgment upon an award rendered by arbitrators shall be entered as provided
therein. The agreement to arbitrate any such claim is only an agreement to have
it resolved by arbitration and should not be construed as a waiver of any legal
right, entitlement, or remedy.

<PAGE>

9. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties with reference to the employment of the
Executive, and supersedes any prior employment agreement, understanding or
arrangement between the Executive and the Corporation, its subsidiaries and
affiliates.

10. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
shall preclude the Corporation from consolidating or merging into or with, or
transferring all or substantially all of its assets to another corporation which
assumes this Agreement and all obligations and undertakings of the Corporation
hereunder. Upon such a consolidation or merger, Corporation as described herein
shall mean such other corporation, and this Agreement shall continue in full
force and effect.

11. General provisions.

(a) Non-assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Executive, his beneficiaries, or legal
representatives without the Corporation's prior written consent; provided, that
nothing in this paragraph shall preclude the executors, administrators, or other
legal representatives of Executive or his estate from assigning any rights
hereunder to the person or persons entitled thereto.

(b) No Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge of hypothecation or to execution,
attachment, levy or similar process or assignment by operation of

<PAGE>

law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.

(c) Binding Effect. This Agreement shall be binding upon, and inure to the
benefit of, Executive and the Corporation and their respective successors and
assigns.

(d) Notice. For purposes of this Agreement, written notice shall be
effective if personally delivered or if sent by certified mail, return receipt
requested, to Executive's last known home address or other address as specified
by Executive. Executive is under an affirmative duty to notify the Corporation
regarding subsequent changes of address. For purpose of computing time, all time
requirements under this Agreement will start on the date mailed or if personally
delivered, when delivered.

(e) Existing market. "Existing market" under this agreement shall mean the
counties in which the Corporation, its subsidiaries and affiliates have offices
or are located and doing business on the date of Executive's termination of
employment.

12. Modification and Waiver.

(a) Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.

(b) Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a

<PAGE>

continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term and condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

13. Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.

14. Governing Law. This Agreement has been executed and delivered in the
State of South Carolina, and it validity, interpretation, performance and
enforcement shall be governed by the laws of such state.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above stated.

FIRST NATIONAL CORPORATION

(SIGNATURES OMITTED)

Board of Directors
First National Corporation

We consent to the use in First National Corporation's Registration Statement on
Form S-2, relating to the registration of up to 170,000 shares of its common
stock of our report dated January 18, 1996, which is included in First National
Corporation's Annual Report on Form 10-K for the year ended December 31, 1995.

J. W. Hunt and Company, LLP

Columbia, South Carolina
May 29, 1996

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of First National Corporation
and the several undersigned Officers and Directors thereof whose signatures
appear below hereby makes, constitutes and appoints C. John Hipp, III and W.
Louis Griffith, and each of them acting individually, its and his true and
lawful attorneys, with power to act without the other and with full power of
substitution, to execute, deliver and file in its or his name and on its or his
behalf, and in each of the undersigned Officer's and Director's capacity or
capacities as shown below, (a) a Registration Statement on Form S-2 (or other
appropriate form) with respect to the registration under the Securities Act of
1933, as amended, of 170,000 shares of common stock, of First National
Corporation and all documents in support thereof or supplemental thereto and any
and all amendments, including any and all post-effective amendments, to the
foregoing (hereinafter called the "Registration Statement"), and (b) such
registration statements, petitions, applications, consents to service of process
or other instruments, any and all documents in support thereof or supplemental
thereto, and any and all amendments or supplements to the foregoing, as may be
necessary or advisable to qualify or register the securities covered by said
Registration Statement; and each of First National Corporation and said Officers
and Directors hereby grants to said attorneys, and to each of them, full power
and authority to do and perform each and every act and thing whatsoever as said
attorneys or attorney may deem necessary or advisable to carry out fully the
intent of this power of attorney to the same extent and with the same effect as
First National Corporation might or could do, and as each of said Officers and
Directors might or could do personally in his capacity or capacities as
aforesaid, and each of First National Corporation and said Officers and
Directors hereby ratifies and confirms all acts and things which said attorneys
or attorney might do or cause to be done by virtue of this power of attorney and
its or his signatures as the same may be signed by said attorneys or attorney,
or any of them, to any or all of the following (and/or any and all amendments
and supplements to any or all thereof): such Registration Statement under the
Securities Act of 1933, as amended, and all such registration statements,
petitions, applications, consents to service of process and other instruments,
and any and all documents in support thereof or supplemental thereto, under such
securities laws, regulations and requirements as may be applicable.

<PAGE>

IN WITNESS WHEREOF, First National Corporation has caused this power of
attorney to be signed on its behalf, and each of the undersigned Officers and
Directors in the capacity or capacities noted has hereunto set his hand, on the
dates indicated below.

FIRST NATIONAL CORPORATION

s/C. John Hipp, III
By:______________________________________
C. John Hipp, III
Its President and Chief Executive Officer

Signature Title Date

s/Charles W. Clark
Director May 9, 1996
(Charles W. Clark)

s/W. B. Cox, Jr.
Director May 9, 1996
(W. B. Cox, Jr.)

s/C. Parker Dempsey
Director May 9, 1996
(C. Parker Dempsey)

s/Clarence F. Evans
Director May 9, 1996
(Clarence F. Evans)

s/E. Everett Gasque, Jr.
Director May 9, 1996
(E. Everett Gasque, Jr.)

s/John L. Gramling, Jr.
Director May 9, 1996
(John L. Gramling, Jr.)

s/W. Louis Griffith
Chief Financial Officer May 9, 1996
(W. Louis Griffith) (Principal Accounting Officer)

s/C. John Hipp, III
President, Chief Executive May 9, 1996
(C. John Hipp, III) Officer and Director

s/Robert R. Horger
Director May 9, 1996
(Robert R. Horger)

s/R. H. Jennings, III
Director May 9, 1996
(R. H. Jennings, III)

s/J. C. McAlhany
Director May 9, 1996
(J. C. McAlhany)

s/Dick Gregg McTeer
Director May 9, 1996
(Dick Gregg McTeer)

s/Harry M. Mims, Jr.
Director May 9, 1996
(Harry M. Mims, Jr.)

s/E. V. Mirmow, Jr.
Director May 9, 1996

<PAGE>

(E. V. Mirmow, Jr.)

s/M. Maceo Nance, Jr.
Director May 9, 1996
(M. Maceo Nance, Jr.)

s/Anne H. Oswald
Director May 9, 1996
(Anne H. Oswald)

s/James W. Roquemore
Director May 9, 1996
(James W. Roquemore)

s/James E. Sulton, Sr.
Director May 9, 1996
(James E. Sulton, Sr.)

s/Johnny E. Ward
Director May 9, 1996
(Johnny E. Ward)

s/A. Dewall Waters
Director May 9, 1996
(A. Dewall Waters)

s/L. D. Westbury
Director May 9, 1996
(L. D. Westbury)