<PAGE> 1
EXHIBIT 99
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the year ended December 31, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from __________ to __________.
Commission file number 333-26029
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
FIRST NATIONAL BANK EMPLOYEES' SAVINGS PLAN
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
FIRST NATIONAL CORPORATION
950 JOHN C. CALHOUN DRIVE, S.E.
ORANGEBURG, SOUTH CAROLINA 29115
<PAGE> 2
FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
FINANCIAL STATEMENTS
WITH SUPPLEMENTARY INFORMATION
YEARS ENDED DECEMBER 31, 1999 AND 1998
AND
INDEPENDENT AUDITORS' REPORT
<PAGE> 3
FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
TABLE OF CONTENTS
PAGE
----
Independent Auditors' Report 2
Statements of Net Assets Available for Benefits 3
Statements of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5-8
Supplementary Information:
Schedule of Assets Held for Investment Purposes 9
Schedule of Reportable Transactions 10
1
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[J.W. Hunt and Company, LLP Letterhead]
INDEPENDENT AUDITORS' REPORT
To the Administrative Committee of
First National Bank Employees' Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the First National Bank Employees' Savings Plan as of December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of First National
Bank Employees' Savings Plan as of December 31, 1999 and 1998, and the changes
in net assets available for benefits for the years then ended, in conformity
with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosures under
the Employee Retirement Income Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Columbia, South Carolina
June 8, 2000
2
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FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS, DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
...... PARTICIPANT DIRECTED ......
................... DECEMBER 31, 1999 ....................
FIRST
FIXED ASSET INDEXED NATIONAL
INCOME MANAGER EQUITY CORP.
FUND FUND FUND STOCK FUND TOTAL
---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at contract value
New York Life Insurance
Company, Investment
Contracts $2,117,167 $2,705,562 $3,315,349 $ -- $8,138,078
------------------------------------------------------------
Investments, at fair value:
First National Corporation -- -- -- 794,745 794,745
Money Market Funds -- -- -- 12,518 12,518
------------------------------------------------------------
Total investments 2,117,167 2,705,562 3,315,349 807,263 8,945,341
------------------------------------------------------------
Receivables:
Employer's contribution 22,905 36,598 65,279 30,731 155,513
Employees' contribution 3,276 4,602 8,462 4,738 21,078
------------------------------------------------------------
Total receivables 26,181 41,200 73,741 35,469 176,591
------------------------------------------------------------
Total assets 2,143,348 2,746,762 3,389,090 842,732 9,121,932
------------------------------------------------------------
LIABILITIES -- -- -- -- --
------------------------------------------------------------
Net assets available for benefits 2,143,348 2,746,762 3,389,090 842,732 9,121,932
============================================================
</TABLE>
<TABLE>
<CAPTION>
...... PARTICIPANT DIRECTED ......
................... DECEMBER 31, 1998 ....................
FIRST
FIXED ASSET INDEXED NATIONAL
INCOME MANAGER EQUITY CORP.
FUND FUND FUND STOCK FUND TOTAL
---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at contract value
New York Life Insurance
Company, Investment
Contracts $1,658,703 $2,450,201 $2,847,997 $ -- $6,956,901
------------------------------------------------------------
Investments, at fair value:
First National Corporation -- -- -- 846,804 846,804
Money Market Funds -- -- -- 10,414 10,414
------------------------------------------------------------
Total investments 1,658,703 2,450,201 2,847,997 857,218 7,814,119
------------------------------------------------------------
Receivables:
Employer's contribution 20,509 35,042 58,127 23,639 137,317
Employees' contribution 2,995 4,975 7,865 3,575 19,410
------------------------------------------------------------
Total receivables 23,504 40,017 65,992 27,214 156,727
------------------------------------------------------------
Total assets 1,682,207 2,490,218 2,913,989 884,432 7,970,846
------------------------------------------------------------
LIABILITIES -- -- -- -- --
------------------------------------------------------------
Net assets available for benefits 1,682,207 2,490,218 2,913,989 884,432 7,970,846
============================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
3
<PAGE> 6
FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
........ PARTICIPANT DIRECTED .......
...................... DECEMBER 31, 1999 .......................
FIRST
FIXED ASSET INDEXED NATIONAL
INCOME MANAGER EQUITY CORP.
FUND FUND FUND STOCK FUND TOTAL
---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed
to:
Investment income:
Interest $ 119,988 $ -- $ -- $ 554 $ 120,542
Dividends -- 88,694 31,741 17,394 137,829
Net appreciation in fair value
of investments -- 202,523 515,770 (191,669) 526,624
Realized gain (loss) on
investments -- 1,063 42,074 (4,218) 38,919
-------------------------------------------------------------------
Total investment income 119,988 292,280 589,585 (177,939) 823,914
-------------------------------------------------------------------
Contributions:
Employer 22,905 36,598 65,279 30,731 155,513
Employee 95,689 147,623 286,689 147,167 677,168
-------------------------------------------------------------------
Total contributions 118,594 184,221 351,968 177,898 832,681
-------------------------------------------------------------------
Total additions 238,582 476,501 941,553 (41) 1,656,595
-------------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to participants 182,816 97,865 165,646 52,024 498,351
Administrative expenses 7,158 -- -- -- 7,158
-------------------------------------------------------------------
Total deductions 189,974 97,865 165,646 52,024 505,509
-------------------------------------------------------------------
Net increase prior to
interfund transfers: 48,608 378,636 775,907 (52,065) 1,151,086
Interfund transfers 412,533 (122,092) (300,806) 10,365 --
-------------------------------------------------------------------
Net increase (decrease) 461,141 256,544 475,101 (41,700) 1,151,086
Net assets available for benefits:
Beginning of year 1,682,207 2,490,218 2,913,989 884,432 7,970,846
-------------------------------------------------------------------
End of year 2,143,348 2,746,762 3,389,090 842,732 9,121,932
===================================================================
</TABLE>
<TABLE>
<CAPTION>
........ PARTICIPANT DIRECTED ........
...................... DECEMBER 31, 1998 .......................
FIRST
FIXED ASSET INDEXED NATIONAL
INCOME MANAGER EQUITY CORP.
FUND FUND FUND STOCK FUND TOTAL
---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed
to:
Investment income:
Interest $ 113,642 $ -- $ -- $ 480 $ 114,122
Dividends -- 59,024 30,613 12,120 101,757
Net appreciation in fair value
of investments -- 355,555 576,855 187,868 1,120,278
Realized gain (loss) on
investments -- 3,345 1,089 102 4,536
-------------------------------------------------------------------
Total investment income 113,642 417,924 608,557 200,570 1,340,693
-------------------------------------------------------------------
Contributions:
Employer 20,509 35,043 58,127 23,638 137,317
Employee 115,922 135,710 219,895 94,106 565,633
-------------------------------------------------------------------
Total contributions 136,431 170,753 278,022 117,744 702,950
-------------------------------------------------------------------
Total additions 250,073 588,677 886,579 318,314 2,043,643
-------------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to participants 259,155 72,144 61,558 26,935 419,792
Administrative expenses 7,499 -- -- -- 7,499
-------------------------------------------------------------------
Total deductions 266,654 72,144 61,558 26,935 427,291
-------------------------------------------------------------------
Net increase prior to
interfund transfers: (16,581) 516,533 825,021 291,379 1,616,352
Interfund transfers (167,827) 56,720 110,835 272 --
-------------------------------------------------------------------
Net increase (decrease) (184,408) 573,253 935,856 291,651 1,616,352
Net assets available for benefits:
Beginning of year 1,866,615 1,916,965 1,978,133 592,781 6,354,494
-------------------------------------------------------------------
End of year 1,682,207 2,490,218 2,913,989 884,432 7,970,846
===================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
4
<PAGE> 7
FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
NOTE A - DESCRIPTION OF PLAN:
The following description of the First National Bank ("Company") Employees'
Savings Plan ("Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General - The Plan is a contributory defined contribution plan covering all
full-time employees of the Company and all affiliates of the Company
who have one year of service and are age twenty-one or older. It is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
Contributions - Each year, participants may contribute up to 18% of pretax
annual base compensation, as defined in the Plan. Participants may also
contribute amounts representing distributions from other qualified
retirement plans. The Company will match 50% of the first 4% of base
compensation up to a maximum matching contribution of 2% of base
compensation. Employer contributions may be made from current or
accumulated net profits. Contributions are subject to certain
limitations.
Participant accounts - Each participant's account is credited with the
participant's contribution, the Company's matching contribution and
allocations of Plan earnings. The participant's account is charged with
an allocation of administrative expenses. Allocations are based on
account balances, as defined by the Plan. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
Vesting - Participants' accounts are fully vested.
Payment of benefits - On termination of service due to death, disability,
retirement, or other reasons, a participant may elect to receive a
lump-sum amount equal to the value of his or her account.
Investment options - Upon enrollment in the Plan, a participant may direct
employee contributions in any of the following investment options.
1) Fixed Income Fund - Funds are invested in guaranteed interest
contracts in an insurance contract. The number of participants
participating in this fund at December 31, 1999 was 121.
2) Asset Manager Fund (formerly Multi-Asset Fund) - Funds are
invested in pooled insurance contracts that invest primarily
in corporate bonds, common stocks, and U. S. Government
securities. The number of participants participating in this
fund at December 31, 1999 was 214.
5
<PAGE> 8
FIRST NATIONAL BANK EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE A - DESCRIPTION OF PLAN (CONTINUED):
3) Indexed Equity Fund - Funds are invested in pooled insurance
contracts that invest in common stock that replicate stocks
comprising the Standard and Poor's 500 Stock Index. The number
of participants participating in this fund at December 31,
1999 was 242.
4) First National Corporation Stock Fund - The First National
Corporation Stock Fund invests only in First National
Corporation common shares and money market equivalents. The
number of participants participating in this fund at December
31, 1999 was 196.
Participants may change the investment options quarterly.
NOTE B - SUMMARY OF ACCOUNTING POLICIES:
Basis of Accounting - The financial statements of the Plan are prepared
using the accrual method of accounting.
Investment Valuation - The Plan's investments are stated at fair value
except for its investment contract with an insurance company which is
valued at contract value (Note C). The Company stock is valued at its
quoted market price.
Purchase and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
Payment of Benefits - Benefits are recorded when paid.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results may
differ from those estimates.
NOTE C - INVESTMENT CONTRACT WITH INSURANCE COMPANY:
The Plan has an investment contract with New York Life Insurance Company (New
York Life) to invest the assets of the Plan. New York Life, as the Plan's
custodian, maintains the assets in a pooled account. The account is credited
with actual earnings on the underlying investments (a fixed income fund,
multi-asset fund and indexed equity fund) and charged for Plan withdrawals and
administrative expenses charged by New York Life.
The contract is included in the financial statements at contract value, which
represents contributions made under the contract, plus earnings, less Plan
withdrawals and administrative expenses.
6
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FIRST NATIONAL BANK EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE C - INVESTMENT CONTRACT WITH INSURANCE COMPANY (CONTINUED):
Participants may ordinarily direct the withdrawal or transfer of all or a
portion of their investment at contract value. There are no reserves against
contract value for credit risk of the contract issuer or otherwise. The fair
value of the investment contacts at December 31, 1999 and 1998 was $8,138,077
and $6,956,901, respectively.
NOTE D - RELATED PARTY TRANSACTIONS:
The First National Corporation Funds are held by the Plan sponsor's Trust
Department. There were no fees paid by the Plan to the Trust Department.
NOTE E - INVESTMENTS:
Except for its investment contracts with an insurance company (Note C), the
Plan's investments are held in a bank-administered trust fund. The following
presents investments at December 31, 1999 and 1998.
1999 1998
---- ----
Investments at fair value as Determined by quoted
market price:
First National Corporation,
35,322 and 30,243 shares, respectively $ 794,745 $ 846,804
Federated Automated Government Money market
fund (44), 7,823 and 7,662 shares, respectively 7,823 7,662
Federated Automated Cash Management Fund
(75), 4,695 and 2,752 shares, respectively 4,695 2,752
--------- ---------
807,263 857,218
========= =========
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$565,543 as follows:
Investments at fair value as determined by
quoted market price:
First National Corporation $ (195,887)
-----------
Investments at contract value:
Asset Manager Fund 203,586
Indexed Equity Fund 557,844
-----------
761,430
-----------
Total 565,543
===========
7
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FIRST NATIONAL BANK EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE F - PLAN TERMINATION:
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their account.
NOTE G - TAX STATUS:
The Internal Revenue Service has determined and informed the Company by a letter
dated November 4, 1992, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code and therefore
exempt from Federal and State taxation. The Plan has been amended since
receiving the determination letter. However, the Plan administrator believes
that the Plan is designed and is currently being operated in compliance with the
applicable requirement of the Internal Revenue Code.
NOTE H - PLAN OPERATING COSTS:
The Company pays certain administrative costs of the Plan such as legal, audit,
and administrative fees.
THESE NOTES ARE AN INTEGRAL PART OF THE ACCOMPANYING FINANCIAL STATEMENTS
8
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FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
IDENTITY OF DESCRIPTION OF INVESTMENT
ISSUE, BORROWER, INCLUDING MATURITY DATE, RATE OF
LESSOR, OR SIMILAR INTEREST, COLLATERAL, PAR OR CURRENT
PARTY MATURITY VALUE COST VALUE
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
New York Life Insurance Co. Guaranteed Interest Contract $ 2,117,167 $ 2,117,167
New York Life Insurance Co. Pooled separate insurance contracts 4,158,073 6,020,910
* First National Corporation 35,322 common shares 740,561 794,745
Federated Automated Government Fund Money Market Fund 7,823 7,823
Federated Automated Cash Management Fund Money Market Fund 4,695 4,695
</TABLE>
* Indicates a party in interest
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
9
<PAGE> 12
FIRST NATIONAL BANK
EMPLOYEES' SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS, YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
CURRENT
EXPENSES VALUE OF
INCURRED ASSET ON
DESCRIPTION PURCHASE SELLING LEASE WITH COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED OF ASSET PRICE PRICE RENTAL TRANSACTION ASSET DATE OR LOSS
-------------------------- -------- ----- ----- ------ ----------- ----- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
New York Life Insurance Co. Group Annuity Contract -
Guaranteed Interest Acct. $913,884 $575,408 $ - $ - $575,408 $ - $ -
New York Life Insurance Co. Group Annuity Contract -
Asset Manager Fund 215,765 252,685 - - 251,622 - 1,063
New York Life Insurance Co. Group Annuity Contract -
Indexed Equity 367,869 490,102 - - 448,028 - 42,074
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
10
<PAGE> 13
[J.W. Hunt and Company, LLP Letterhead]
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors
First National Corporation
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 333-26029) filed by First National Corporation of our report dated
June 8, 2000 appearing in the Annual Report of the First National Bank
Employees' Savings Plan on Form 11-K for the year ended December 31, 1999.
/s/ J.H. Hunt and Company, LLP
Columbia, South Carolina
June 27, 2000
