UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~April~~June 1320, 2012

MOUNTAIN NATIONAL BANCSHARES, INC.

(Exact name of registrant as specified in charter)

Tennessee	0-49912	75-3036312
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)
300 East Main Street, Sevierville,
Tennessee		37862
(Address of principal executive offices)		(Zip Code)

300 East Main Street, Sevierville, Tennessee				37862
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (865) 428-7990

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

In connection with Dwight B. Grizzell’s retirement as President and Chief Executive Officer of Mountain National Bancshares, Inc., a Tennessee corporation (the “Company”), on April 19, 2012, James S. Friddell was appointed as Chief Executive Officer of the Company and as a member of the Board of Directors of the Company to be effective April 19, 2012. Under Tennessee law, Mr. Friddell’s term as a director of the Company will expire at the Company’s next Annual Meeting of Shareholders expected to be held in July 2012 (the “Annual Meeting”), and the Company expects the Board will nominate Mr. Friddell for election to the Board at the Annual Meeting in the class of directors with a term to expire at the Company’s Annual Meeting of Shareholders to be held in 2015.

Mr. Friddell, age 62, has over 30 years of banking experience as well as regulatory experience gleaned from being a former employee of the Federal Deposit Insurance Corporation (“FDIC”). Mr. Friddell has been Executive Vice President and Chief Credit Officer of Mountain National Bank, a wholly-owned subsidiary of the Company (the “Bank”), since April 2009 and prior to that time served as a Senior Lending Officer with Mountain Commerce Bank since 2006. The Board believes that Mr. Friddell’s extensive banking experience and the experience he will have managing the day to day operations of the Company’s business as the Company’s Chief Executive Officer will provide the Board with knowledge and insight into the Company’s operations and will make him a valuable member of the Board.

On April 19, 2012, Michael L. Brown was appointed as President of the Company and as a member of the Board of Directors of the Company to be effective April 19, 2012. Under Tennessee law, Mr. Brown’s term as a director of the Company will expire at the Annual Meeting, and the Company expects the Board will nominate Mr. Brown for election to the Board at the Annual Meeting in the class of directors with a term to expire at the Company’s Annual Meeting of Shareholders to be held in 2015.

Mr. Brown, age 52, has served as Executive Vice President — Chief Operating Officer of the Company and the Bank since the Company’s inception in 2002 and with the Bank since 1998. Prior to joining the Bank, Mr. Brown served as a Senior Vice President of First National Bank of Gatlinburg from 1995 to 1997, which later was acquired by BankFirst where he continued to serve in that capacity until joining the Bank in 1998. Mr. Brown has a combined banking career spanning 30 years, beginning with First Federal Savings Bank in Maryville, Tennessee in 1981. The Board believes that Mr. Brown’s extensive banking experience and the experience he will have managing the day to day operations of the Company’s business as the Company’s President will provide the Board with knowledge and insight into the Company’s operations and will make him a valuable member of the Board.

Item 8.01. Other Events.

~~On April 13,~~For ~~2012, the Bank was notified by the Office of the Comptroller of the Currency (the “OCC”) that, as of April 11, 2012, the Bank was considered “critically undercapitalized” for~~ purposes of Prompt Corrective Action (“PCA”) under 12 U.S.C. § 1831o and 12 C.F.R. Part 6., ~~The~~the ~~Bank~~designation ~~was~~of ~~designated~~Mountain National asBank ~~being~~(the “~~critically undercapitalized~~Bank”), asthe awholly-owned ~~result~~bank subsidiary of ~~its~~Mountain ~~tangible~~National ~~equity~~Bancshares, ~~capital~~Inc. ~~ratio~~(the ~~falling~~“Company”), ~~below~~was 2%changed asto ~~stated~~“significantly inundercapitalized” effective upon the Bank’s filing an amended December 31, 2011 Report of Condition and Income (“Call Report”) ~~filed~~ with ~~the~~its federal regulators on ~~April~~May 1130, 2012. As a result of it being “critically undercapitalized” for PCA purposes, the Bank remains obligated to submit a capital restoration plan acceptable to the OCC, which plan will be required to be guaranteed by the Company. Furthermore, the Bank is prohibited, without the approval of the OCC, from (i) entering into any material transaction other than in ~~the usual course of business, including any investment, expansion, acquisition, sale of assets, or other similar action with respect to~~ which ~~the~~its ~~Bank~~tangible isequity ~~required~~capital toratio ~~provide~~was ~~notice to the OCC; (ii) extending any credit for any highly leveraged transactions as defined in 12 C~~2.F10%.R. §The ~~325.2(i); (iii) amending the~~ Bank’s ~~charter~~tangible orequity ~~bylaws,~~capital ~~except~~ratio toas ~~the extent necessary to carry out any other requirement~~ of ~~law~~March 31, ~~regulation~~ 2012, ~~or order; (iv) making any material change in accounting methods; (v) engaging in any covered transaction~~ as ~~defined~~reflected in ~~Section 23A(b)~~its ofamended ~~the~~Call ~~Federal~~Report ~~Reserve~~filed ~~Act~~with ~~(12 U.S.C. § 371c(b)); (vi) paying excessive compensation or bonuses; and (vii) paying interest on new or renewed liabilities at a rate that would increase~~ the ~~Bank’s~~federal ~~weighted~~regulators ~~average cost of funds to a level significantly exceeding the prevailing rates of interest~~ on ~~insured~~June 14, ~~deposits~~2012, inimproved ~~the~~further ~~Bank’s normal market areas. The Bank also remains subject~~ to ~~regulatory restrictions prohibiting the acceptance, renewal or rolling over of brokered deposits~~2.45%.

~~Under~~As ~~the Federal~~a ~~Deposit~~result ~~Insurance~~of ~~Act,~~no ~~depository~~longer ~~institutions~~being ~~that~~designated ~~are~~as “critically undercapitalized”, ~~can~~the Bank is no longer required under applicable PCA regulations to be placed into conservatorship or receivership within 90 days of ~~becoming~~such ~~critically~~designation ~~undercapitalized~~under certain circumstances. In addition, ~~unless~~the ~~they~~Bank ~~raise~~is ~~sufficient~~no ~~capital,~~longer prohibited by virtue of the FDIC’s prompt corrective action statute from (i) entering into any material transaction other than in the usual ~~merge~~course of business, including any investment, expansion, acquisition, sale of assets, or other similar action with ~~another~~respect ~~financial~~to ~~institution~~which the Bank is required to provide notice to its federal regulator; (ii) extending any credit for any highly leveraged transactions as defined in 12 C.F.R. § 325.2(i); (iii) amending the Bank’s charter or bylaws, except to the ~~FDIC~~extent ~~determines~~necessary ~~and~~to ~~documents~~carry ~~that~~out “any other ~~action”~~requirement ~~would~~of ~~better~~law, ~~achieve~~regulation, ~~the~~or ~~purposes~~order; (iv) making any material change in accounting methods; (v) engaging in any covered transaction as defined in Section 23A(b) of the ~~PCA~~Federal ~~capital~~Reserve ~~requirements~~Act (12 U.S.C. § ~~1831o~~371c(b).); ~~The~~(vi) paying ~~Company~~excessive compensation or bonuses; and (vii) paying interest on new or renewed liabilities at a rate that would increase the Bank’s ~~are~~weighted ~~diligently continuing~~average tocost ~~work~~of funds to ~~evaluate~~a ~~and~~level ~~pursue~~significantly ~~strategic~~exceeding ~~alternatives.~~the ~~There~~prevailing ~~can~~rates beof nointerest ~~assurance~~on ~~that~~insured deposits in the ~~Company~~Bank’s ornormal ~~the~~market areas. The Bank ~~will~~remains, however, besubject ~~successful~~to inother ~~obtaining~~regulatory ~~outside~~restrictions ~~additional~~prohibiting ~~capital~~the acceptance, renewal or ~~merging~~rolling ~~with~~over orof ~~being~~brokered ~~acquired~~deposits byand ~~another~~the ~~company~~paying ~~within~~of ~~any regulatory~~interest ~~imposed~~on ~~time~~deposits ~~frame~~above certain national rate caps.

~~The~~Notwithstanding the improvement in the Bank’s designation for PCA purposes, the Bank remains obligated to submit a ~~member~~capital restoration ofplan ~~the~~acceptable ~~FDIC~~to its federal regulator, ~~and~~which ~~deposits~~plan atwill ~~the~~be ~~Bank~~required ~~remain~~to ~~insured~~be guaranteed by the ~~FDIC~~Company. ~~up to~~The Company and the ~~legal~~Bank ~~maximum~~continue ~~insurance~~to ~~limit~~diligently –work ~~currently~~to ~~$250~~evaluate and pursue strategic alternatives,~~000~~ ~~per~~including, ~~depositor~~but not limited to, ~~per~~the sale ~~deposit~~of ~~category.~~common ~~The~~or preferred stock, the sale of all or certain of the assets of the Bank’s ~~customer~~or ~~service~~the ~~staff~~Company or the merger of the Bank or the Company with another financial institution or its holding company. There can ~~help~~be ~~depositors~~no assurance that the Company or the Bank will be successful in obtaining outside additional capital or merging with ~~any~~or ~~questions~~being ~~about~~acquired by another company or submitting an acceptable capital restoration plan. There can also be no assurance that the ~~mechanics~~Bank’s oftangible ~~FDIC~~equity capital ~~deposit~~ratio ~~insurance~~will not in the future fall below 2%.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


MOUNTAIN NATIONAL BANCSHARES, INC.

By:		/s/ Richard A. Hubbs
Name:		Richard A. Hubbs
Title:		Senior Vice President
		and Chief Financial Officer

Date: ~~April~~June 1926, 2012

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