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                                  EXHIBIT 99.1
                 PRESS RELEASE OF THE COMPANY DATED JUNE 2, 1999



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                             *FOR IMMEDIATE RELEASE*


Contact:    Bill Painter
            President
            (864)596-8313


        FIRSTSPARTAN FINANCIAL CORP. ANNOUNCES SPECIAL CASH DISTRIBUTION

      SPARTANBURG, S.C., June 2, 1999 -- FirstSpartan Financial Corp. (the
"Company") (Nasdaq/NMS: FSPT) announced today that its Board of Directors has
declared a special cash distribution in the amount of $12.00 per share, payable
on June 25, 1999 to stockholders of record as of the close of business on June
14, 1999. The Company expects that the majority of the distribution will be a
non-taxable return of capital, although the exact amount of the distribution
that could be considered non-taxable cannot be confirmed until the Company
determines its operating results for the tax year ending June 30, 1999. The
amount of the special cash distribution that would be treated as a return of
capital will be treated as a reduction in the cost basis of each share and will
not be subject to income tax as a dividend to shareholders.

      Because of the magnitude of the cash distribution in relation to the
Company's share price, rules of the Nasdaq Stock Market require that the stock
trade ex-dividend on the day after payment, which will be June 28, 1999.
Shareholders who sell their shares before the ex-dividend date transfer the
right to receive the cash distribution to the buyers of the shares. On the
ex-dividend date, the price of the Company's shares is expected to decrease by
the amount of the distribution.

      Bill Painter, the Company's President and Chief Executive Officer, stated
that "the Board of Directors is committed to managing our excess capital. This
distribution, in combination with previous share repurchases, will have reduced
our equity to assets ratio from in excess of 26% to approximately 12% since our
conversion from mutual to stock ownership in July 1997. We believe that this
distribution will enhance the value of our shareholders' investment."

      The Company's Employee Stock Ownership Plan ("ESOP"), a qualified
retirement benefit plan covering all full-time employees, holds approximately
354,430 shares of Company stock. The trustees of the ESOP expect to purchase
additional shares in open market transactions beginning June 28, 1999 with the
$4.2 million it will receive from the distribution.

      The Company expects that it will be required to record a charge to
compensation expense related to payment of the distribution on shares of stock
in its restricted stock plan. The amount of the charge is estimated to be
approximately $1.5 million (after the related income tax benefits). As a result
of this one-time charge in the fourth fiscal quarter ending June 30, 1999, the
on-going expense related to this plan will decrease.

      FirstSpartan Financial Corp. is the holding company for First Federal
Bank, which operates eleven full-service offices in Spartanburg and Greenville
Counties of South Carolina.