FIRST CITIZENS BANCSHARES INC /DE/ - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

For the period ended March 31, 2003

Commission File Number: 0-16471

First Citizens BancShares, Inc
(Exact name of Registrant as specified in its charter)

Delaware 56-1528994
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

3128 Smoketree Court, Raleigh, North Carolina 27604
(Address of principal executive offices) (zip code)

(919) 716-7000
(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.

Yes X No _____

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act)

Yes X No _____

Class A Common Stock--$1 Par Value-- 8,792,061 shares
Class B Common Stock--$1 Par Value-- 1,677,675 shares
(Number of shares outstanding, by class, as of May 13,2003)

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at March 31, 2003,
December 31, 2002,and March 31, 2002

Consolidated Statements of Income for the three-month
periods ended March 31, 2003 and March 31, 2002

Consolidated Statements of Changes in Shareholders'
Equity for the three-month periods ended March 31, 2003,
and March 31, 2002

Consolidated Statements of Cash Flows for the three-month
periods ended March 31, 2003, and March 31, 2002

Notes to Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market
Risk

Item 4. Controls and Procedures

(a)In conjunction with this filing and their certifications of the disclosures
contained within this filing, Chief Executive Officer Lewis R. Holding and
Chief Financial Officer Kenneth A. Black evaluated the effectiveness of
Registrant's disclosure controls and procedures. This review, which
occurred within 90 days of this report's filing, found the disclosure
controls and procedures to be effective.

(b)There were no significant changes in Registrant's internal controls or in
other factors that could significantly affect these controls subsequent to
the evaluation by Mr. Holding and Mr. Black.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits.

99 Certification

(b) Reports on Form 8-K. During the quarter ended March 31, 2003,
Registrant filed no Current Reports on Form 8-K.

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 thereunto duly authorized.

FIRST CITIZENS BANCSHARES, INC.
(Registrant)

Dated: May 13, 2003
By:/s/Kenneth A. Black
Kenneth A. Black
Vice President, Treasurer,
and Chief Financial Officer

First Citizens BancShares, Inc and Subsidiaries
First Quarter 2003

CERTIFICATIONS

Certification of Chief Executive Officer

I, Lewis R. Holding, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Citizens
BancShares, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b)evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c)presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: May 13, 2003 /s/ Lewis R. Holding
_________________________
Lewis R. Holding
Chief Executive Officer

Certification of Chief Financial Officer

I, Kenneth A. Black, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Citizens
BancShares, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b)evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c)presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: May 13, 2003 /s/ Kenneth A. Black
________________________
Kenneth A. Black
Chief Financial Officer

First Citizens BancShares, Inc and Subsidiaries
First Quarter 2003

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

Note A
Accounting Policies
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements.
In the opinion of management, the consolidated statements contain all
material adjustments necessary to present fairly the financial position of First
Citizens BancShares, Inc. as of and for each of the periods presented, and all
such adjustments are of a normal recurring nature. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the period. Actual results could differ
from those estimates.
These financial statements should be read in conjunction with the financial
statements and notes included in the 2002 First Citizens BancShares, Inc. Annual
Report, which is incorporated by reference on Form 10-K. Certain amounts for
prior periods have been reclassified to conform with statement presentations for
2003. However, except as noted below, the reclassifications have no effect on
shareholders' equity or net income as previously reported.
BancShares adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 147 (Statement 147) during the fourth quarter of 2002.
Statement 147 required that any reclassification of previously recognized
unidentifiable intangible assets as goodwill be retroactively applied to
coincide with the adoption of SFAS No. 142 (Statement 142). As a result,
amortization expense related to assets that were reclassified pursuant to
Statement 147 has been reversed, and the financial statements and related
disclosures made for the first, second and third quarters of 2002 have been
restated. For the quarter ended March 31, 2002, noninterest expense declined
$2,516, income tax expense increased $890 and net income increased $1,626.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34 (Interpretation
45). Interpretation 45 elaborates on the disclosures to be made by a guarantor
in its financial statements about its obligations under guarantees issued.
Interpretation 45 also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken. The initial recognition and measurement provisions of Interpretation
45 were applicable to guarantees issued or modified after December 31, 2002. The
disclosure requirements were effective for financial statements of interim and
annual periods ending after December 31, 2002. The adoption of Interpretation 45
did not have a material impact on BancShares consolidated financial statements.

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

Note B
Operating Segments
BancShares conducts its banking operations through its two wholly-owned
subsidiaries, FCB and Atlantic States Bank (ASB). Although FCB and ASB offer
similar products and services to customers, each entity operates in distinct
geographic markets and each entity has a separate management group.
Additionally, the financial results and trends of ASB reflect the de novo nature
of its growth.
FCB is a mature banking institution that operates from a single charter
from its branch network in North Carolina, Virginia and West Virginia. ASB began
operations in 1997 and currently operates branches in Georgia, Florida, Texas
and Arizona under a federal thrift charter. ASB will expand its branch network
into California during 2003.
In the aggregate, FCB and its consolidated subsidiaries, which are integral
to its branch operation, and ASB account for more than 90 percent of
consolidated assets, revenues and net income. Other includes activities of the
parent company, two subsidiaries that are the issuing trusts for outstanding
preferred securities, Neuse, Incorporated, a subsidiary that owns real property
used in the banking operation and American Guaranty Insurance Corporation, a
property insurance company.
The adjustments in the accompanying tables represent the elimination of the
impact of certain inter-company transactions. The adjustments to interest income
and interest expense neutralize the earnings and cost of inter-company
borrowings. The adjustments to noninterest income and noninterest expense
reflect the elimination of management fees and other services fees paid by one
company to another within BancShares' consolidated group.

Segment Disclosures
($ in thousands)
March 31, 2003
ASB FCB Other Total Adjustments Consolidated

Interest income $ 14,568 $ 116,339 $ 6,152 $ 137,059 $ (5,985) $ 131,074
Interest expense 5,299 32,169 10,675 48,143 (5,985) 42,158
------------------------------------------------------------------------------------
Net interest income 9,269 84,170 (4,523) 88,916 - 88,916
Provision for loan losses 196 5,367 - 5,563 - 5,563
------------------------------------------------------------------------------------
Net interest income after 9,073 78,803 (4,523) 83,353 - 83,353
provision for loan losses
Noninterest income 1,233 56,796 (538) 57,491 (1,104) 56,387
Noninterest expense 10,189 101,356 841 112,386 (1,104) 111,282
------------------------------------------------------------------------------------
Income before income taxes 117 34,243 (5,902) 28,458 - 28,458
Income taxes 50 12,200 (2,086) 10,164 - 10,164
------------------------------------------------------------------------------------
Net income $ 67 $ 22,043 $ (3,816) $ 18,294 $ - $ 18,294
====================================================================================
Period-end assets $ 1,095,895 $ 11,201,620 $ 1,747,422 $ 14,044,937 $ (1,656,196) $ 12,388,741

March 31, 2002 (Restated)
ASB FCB Other Total Adjustments Consolidated

Interest income $ 13,072 $ 140,487 $ 8,384 $ 161,943 $ (5,795) $ 156,148
Interest expense 6,399 47,046 11,487 64,932 (5,795) 59,137
------------------------------------------------------------------------------------
Net interest income 6,673 93,441 (3,103) 97,011 - 97,011
Provision for loan losses 1,065 4,915 - 5,980 - 5,980
------------------------------------------------------------------------------------
Net interest income after 5,608 88,526 (3,103) 91,031 - 91,031
provision for loan losses
Noninterest income 1,218 53,929 305 55,452 (1,237) 54,215
Noninterest expense 8,163 99,783 197 108,143 (1,237) 106,906
------------------------------------------------------------------------------------
Income before income taxes (1,337) 42,672 (2,995) 38,340 - 38,340
Income taxes (461) 15,047 (1,070) 13,516 - 13,516
------------------------------------------------------------------------------------
Net income $ (876) $ 27,625 $ (1,925) $ 24,824 $ - $ 24,824
====================================================================================
Period-end assets $ 880,803 $ 10,622,373 $ 1,739,378 $ 13,242,554 $ (1,494,576) $ 11,747,978

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

Financial Summary
Table 1
2003 2002
First Fourth Third Second First
(thousands, except per share data and ratios) Quarter Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------------------------------

Summary of Operations
Interest income $ 131,074 $ 140,508 $ 147,742 $ 151,771 $ 156,148
Interest expense 42,158 47,712 52,127 55,042 59,137
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 88,916 92,796 95,615 96,729 97,011
Provision for loan losses 5,563 7,156 5,592 7,822 5,980
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 83,353 85,640 90,023 88,907 91,031
Noninterest income 56,387 56,618 55,282 55,259 54,215
Noninterest expense 111,282 112,496 108,325 105,705 106,906
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 28,458 29,762 36,980 38,461 38,340
Income taxes 10,164 10,422 13,190 13,659 13,516
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 18,294 $ 19,340 $ 23,790 $ 24,802 $ 24,824
===================================================================================================================================
Net interest income-taxable equivalent $ 89,200 $ 93,106 $ 95,932 $ 97,074 $ 97,382
- -----------------------------------------------------------------------------------------------------------------------------------
Selected Quarterly Averages
Total assets $ 12,054,717 $ 12,076,262 $ 11,871,334 $ 11,756,150 $ 11,664,376
Investment securities 2,476,426 2,544,930 2,553,957 2,641,898 2,704,077
Loans 7,642,673 7,543,548 7,450,271 7,312,384 7,207,757
Interest-earning assets 10,741,160 10,771,571 10,592,386 10,491,811 10,353,509
Deposits 10,283,143 10,251,693 10,060,785 9,934,615 9,776,690
Interest-bearing liabilities 9,173,567 9,234,127 9,131,569 9,075,549 9,073,637
Long-term obligations 253,389 253,412 253,973 262,224 283,993
Shareholders' equity $ 979,664 $ 953,606 $ 935,735 $ 916,387 $ 894,689
Shares outstanding 10,472,065 10,475,377 10,477,886 10,480,527 10,481,661
- -----------------------------------------------------------------------------------------------------------------------------------
Selected Quarter-End Balances
Total assets $ 12,388,741 $ 12,231,890 $ 12,087,152 $ 11,867,758 $ 11,747,978
Investment securities 2,362,130 2,539,236 2,502,026 2,464,779 2,576,383
Loans 7,704,492 7,620,263 7,521,834 7,434,662 7,248,088
Interest-earning assets 10,991,877 10,534,469 10,647,042 10,438,386 10,422,451
Deposits 10,594,380 10,439,620 10,286,825 10,065,180 9,872,979
Interest-bearing liabilities 9,293,396 9,298,080 9,208,776 9,121,010 9,099,535
Long-term obligations 253,386 253,409 253,970 253,979 283,988
Shareholders' equity $ 983,635 $ 967,291 $ 949,871 $ 930,175 $ 907,907
Shares outstanding 10,470,236 10,473,294 10,476,137 10,480,391 10,480,624
- -----------------------------------------------------------------------------------------------------------------------------------
Profitability Ratios (averages)
Rate of return (annualized) on:
Total assets 0.62 % 0.64 % 0.80 % 0.85 % 0.86 %
Shareholders' equity 7.61 8.05 10.09 10.86 11.25
Dividend payout ratio 15.71 13.51 11.01 10.55 10.55
- -----------------------------------------------------------------------------------------------------------------------------------
Liquidity and Capital Ratios (averages)
Loans to deposits 74.32 % 73.58 % 74.05 % 73.61 % 73.72 %
Shareholders' equity to total assets 8.13 7.90 7.88 7.79 7.67
Time certificates of $100,000 or more to total
deposits 10.44 10.42 10.54 10.90 11.54
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share of Stock
Net income $ 1.75 $ 1.85 $ 2.27 $ 2.37 $ 2.37
Cash dividends 0.275 0.250 0.250 0.250 0.250
Book value at period end 93.05 92.36 90.67 88.77 86.63
Tangible book value at period end 83.39 81.73 80.23 78.28 76.07
- -----------------------------------------------------------------------------------------------------------------------------------

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

Outstanding Loans by Type
Table 2
2003 2002
First Fourth Third Second First
(thousands) Quarter Quarter Quarter Quarter Quarter
- -------------------------------------------------------------------------------------------------------------------------

Real estate:
Construction and land development $ 834,027 $ 799,278 $ 816,512 $ 801,294 $ 804,517
Mortgage:
1-4 family residential 975,010 1,058,082 1,091,344 1,131,466 1,153,757
Commercial 2,077,633 2,035,646 1,966,433 1,924,087 1,884,616
Revolving 1,404,014 1,335,024 1,259,593 1,175,693 1,080,896
Other 148,684 150,226 158,125 156,817 154,469
- -------------------------------------------------------------------------------------------------------------------------
Total real estate 5,439,368 5,378,256 5,292,007 5,189,357 5,078,255
Commercial and industrial 936,387 925,775 937,987 954,369 936,353
Consumer 1,135,622 1,154,280 1,132,406 1,130,753 1,077,265
Lease financing 137,562 141,372 142,695 141,351 137,383
Other 55,553 20,580 16,739 18,832 18,832
- -------------------------------------------------------------------------------------------------------------------------
Total loans 7,704,492 7,620,263 7,521,834 7,434,662 7,248,088
Less reserve for loan losses 113,382 112,533 111,577 110,472 108,692
- -------------------------------------------------------------------------------------------------------------------------
Net loans $7,591,110 $7,507,730 $7,410,257 $7,324,190 $7,139,396
- -------------------------------------------------------------------------------------------------------------------------

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

Investment Securities Table 3

March 31, 2003 March 31, 2002
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Average Taxable Average Taxable
Fair Maturity Equivalent Fair Maturity Equivalent
(thousands) Cost Value (Yrs./Mos.) Yield Cost Value (Yrs./Mos.) Yield
- --------------------------------------------------------------------------------------------------------------------------------

Investment securities held to maturity:
U. S. Government:
Within one year $ 1,364,403 $ 1,369,721 0/5 2.42 % $ 2,263,950 $ 2,268,657 0/5 4.27 %
One to five years 600,271 608,015 1/5 2.30 169,244 168,081 2/5 4.03
Five to ten years 88 94 6/9 8.00 141 149 7/10 8.00
Ten to twenty years 23,247 24,250 14/1 5.55 - -
Over twenty years 1,617 1,690 25/8 7.14 4,676 4,805 24/6 7.38
- --------------------------------------------------------------------------------------------------------------------------------
Total 1,989,626 2,003,770 0/11 2.42 2,438,011 2,441,692 0/8 4.26
State, county and municipal:
Within one year - - 1,104 1,118 0/5 6.81
One to five years 480 502 2/3 5.55 500 516 3/3 5.55
Five to ten years 144 155 6/1 5.88 143 149 7/1 5.88
Ten to twenty years 1,416 1,555 15/1 6.02 1,413 1,507 15/9 5.69
- --------------------------------------------------------------------------------------------------------------------------------
Total 2,040 2,212 11/5 5.90 3,160 3,290 10/3 5.96
Other
Within one year - - 35 35 0/8 3.46
One to five years - - - -
Five to ten years 250 250 5/4 7.75 250 250 6/4 7.75
- --------------------------------------------------------------------------------------------------------------------------------
Total 250 250 5/8 7.54 285 285 4/4 6.25
Total investment securities
held to maturity 1,991,916 2,006,232 0/11 2.43 2,441,456 2,445,267 0/7 4.33
- --------------------------------------------------------------------------------------------------------------------------------
Investment securities available for sale:
U. S. Government:
Within one year 292,223 293,238 0/3 3.05 76,661 76,516 0/8 2.08
One to five years 20,446 20,593 1/4 1.90 - -
Five to ten years 569 547 8/10 4.48 - -
Ten to twenty years - - 1,263 1,276 15/4 5.33
Over twenty years 145 145 29/8 1.15 - -
- ------------------------------------------------------------------------------------------------------------------------------
Total 313,383 314,523 0/4 2.97 77,924 77,792 0/11 2.13
Marketable equity securities 40,526 55,691 42,950 57,135
Total investment securities
available for sale 353,909 370,214 0/4 2.97 % 120,874 134,927 0/11 2.13 %
- ------------------------------------------------------------------------------------------------------------------------------
Total investment securities $ 2,345,825 $ 2,376,446 $ 2,562,330 $ 2,580,194
- -------------------------------------------------------- ---------------------------

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

First Citizens BancShares, Inc. and Subsidiaries
First Quarter 2003

Management's Discussion and Analysis of
Financial Condition and Results of Operations

INTRODUCTION
Management's discussion and analysis of earnings and related financial data
are presented to assist in understanding the financial condition and results of
operations of First Citizens BancShares, Inc. and Subsidiaries ("BancShares").
This discussion and analysis should be read in conjunction with the unaudited
Consolidated Financial Statements and related notes presented within this
report. This discussion primarily focuses on BancShares' two banking
subsidiaries: First-Citizens Bank & Trust Company ("FCB"), a North
Carolina-chartered bank that operates branches in North Carolina, Virginia and
West Virginia, and Atlantic States Bank ("ASB"), a federally-chartered thrift
institution that operates offices in Georgia, Florida, Texas and Arizona.
We adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 147 (Statement 147) during the fourth quarter of 2002. Statement 147
required that any reclassification of previously recognized unidentifiable
intangible assets to goodwill be retroactively applied to coincide with the
adoption of SFAS No. 142 (Statement 142). As a result, amortization expense
related to assets that were reclassified pursuant to Statement 147 has been
reversed, and the financial statements and related disclosures made for the
first, second and third quarters of 2002 have been restated.
In addition, we have reclassified certain other amounts for prior years to
conform with statement presentations for 2003. However, except for the adoption
of Statement 147, the reclassifications had no effect on shareholders' equity or
net income as previously reported. Intercompany accounts and transactions have
been eliminated.

SUMMARY
Consolidated net income during the first quarter of 2003 was $18.3 million,
down 26.3% when compared to the $24.8 million earned during the corresponding
period of 2002. Net income per share during the first quarter of 2003 totaled
$1.75, compared to $2.37 during the first quarter of 2002. The decline in net
income for the first quarter resulted from reductions in net interest income and
higher noninterest expenses, partially offset by higher noninterest income. Our
annualized return on average assets was 0.62 percent for the first quarter of
2003 and 0.86 percent for the first quarter of 2002, while our annualized return
on shareholders' equity equaled 7.61% and 11.25% for the respective periods.
Various profitability, liquidity and capital ratios are presented in Table
1. To understand the changes and trends in interest-earning assets and
interest-bearing liabilities, refer to the average balance sheets presented in
Table 4 for the first three months of 2003 and 2002.

INTEREST-EARNING ASSETS
At March 31, 2003, interest-earning assets totaled $10.99 billion, an
increase of $569.4 million or 5.5 percent from March 31, 2002. This increase
results from growth in the loan portfolio and overnight investments, offset by a
decline in the investment securities portfolio.
Loans. At March 31, 2003 and 2002, gross loans totaled $7.70 billion and
$7.25 billion, respectively. As of December 31, 2002, gross loans were $7.62
billion. The $456.4 million growth in loans from March 31, 2002 to March 31,
2003 results from growth within BancShares' revolving real estate-secured loans.
This growth has resulted from customer demand for BancShares' retail EquityLine
product during both 2002 and 2003. Revolving mortgage loans outstanding
increased from $1.08 billion at March 31, 2002 to $1.40 billion at March 31,
2003, an increase of $323.1 million or 29.9 percent. As of March 31, 2003,
consumer purpose loans have increased $58.2 million since March 31, 2002, a 5.4
percent increase, caused by growth in indirect automobile loans originated
through our sales finance unit.
Mortgage loans secured by 1-4 family residences have declined from $1.23
billion at March 31, 2002 to $975.0 million at March 31, 2003, a $254.9 million
or 20.7 percent reduction. Although demand for residential mortgage loans surged
during 2002 and the first quarter of 2003 due to interest rate reductions, a
substantial portion of our residential mortgage loans is originated through
correspondents. Consequently, the heightened loan demand did not generate growth
in loans outstanding.
During the first quarter of 2003, loans averaged $7.64 billion, an increase
of $434.9 million or 6.0 percent from the comparable period of 2002.
We expect continued growth among revolving real estate loans during 2003,
and continued reduction in 1-4 family residential mortgage loans as existing
loan balances amortize or are refinanced. Despite the current low level of
interest rates, which would normally stimulate loan demand and business growth,
current weak economic conditions contribute to general uncertainty among
business and retail customers and therefore constrain our loan growth estimates
for 2003. All growth projections are subject to change as a result of further
economic deterioration or improvement.
Investment securities. At March 31, 2003 and 2002, the investment portfolio
totaled $2.36 billion and $2.58 billion, respectively. At December 31, 2002, the
investment portfolio was $2.54 billion. Since March 31, 2002, investment
securities decreased $214.3 million, or 8.3 percent. Table 3 presents detailed
information relating to the investment securities portfolio.
Investment securities held to maturity totaled $1.99 billion at March 31,
2003, compared to $2.42 billion at December 31, 2002 and $2.44 billion at March
31, 2002. The reduction in investment securities held to maturity during 2003
resulted from our decision to reinvest a portion of the proceeds from maturing
held to maturity securities in securities classified as available for sale and
overnight investments. This redirection of a portion of the investment
securities portfolio enhances the overall liquidity of the balance sheet. All
securities that are classified as held-to-maturity reflect BancShares' ability
and positive intent to hold those investments until maturity.
Investment securities available for sale totaled $370.2 million at March
31, 2003, compared to $121.7 million at December 31, 2002 and $134.9 million at
March 31, 2002. The $248.5 million increase from March 31, 2002 is attributable
to the previously-discussed focus on balance sheet liquidity. We anticipate that
the amount of available-for-sale securities will continue to increase in 2003.
Available-for-sale securities are reported at their aggregate fair value.
Investment securities averaged $2.48 billion during the first quarter of
2003, compared to $2.70 billion during the first quarter of 2002, a reduction of
$227.7 million or 8.4 percent. The reduction in average investment securities
occurred as loan demand and higher balances of overnight investments absorbed
liquidity that resulted from maturing securities.
Overnight investments. Overnight investments totaled $925.3 million at
March 31, 2003, compared to $623.6 million at December 31, 2002 and $598.0
million at March 31, 2002, the $327.3 million or 48.4 percent growth resulting
from higher interest-bearing deposits in other banks. Overnight investments
averaged $622.1 million during the first quarter of 2003, an increase of $180.4
million or 40.8 percent from the first quarter of 2002. The higher balance in
overnight investments resulted from liquidity management decisions.
Income on Interest-Earning Assets. Interest income amounted to $131.1
million during the first quarter of 2003, a $25.1 million or 16.1 percent
decrease from the first quarter of 2002. Lower yields triggered the decrease in
interest income in the first quarter of 2003 when compared to the same period of
2002. Table 4 analyzes interest-earning assets and interest-bearing liabilities
for the first quarter of 2003 and 2002. To help assess the impact of the
tax-exempt status of income earned on certain loans, leases and municipal
securities, Table 5 is prepared on a taxable-equivalent basis. The
taxable-equivalent yield on interest-earning assets for the first quarter of
2003 was 4.95 percent, compared to 6.11 percent for the corresponding period of
2002, a 116 basis point reduction.
Loan interest income for the first quarter of 2003 was $113.4 million, a
decrease of $10.8 million or 8.7 percent from the first quarter of 2002, the
result of lower yields. The taxable-equivalent yield on the loan portfolio was
6.02 percent during the first quarter of 2003, compared to 6.98 percent during
the same period of 2002. The reduced loan yields resulted from market-driven
rate movements as well as a larger mix of lower-yielding revolving real estate
secured loans in 2003. The effect of the decrease in yields on interest income
was partially offset by an increase in average loan volume, which increased
$434.9 million or 6.0 percent from the first quarter of 2002 to the first
quarter of 2003.
Income earned on the investment securities portfolio amounted to $15.8
million during the first quarter of 2003 and $30.1 million during the same
period of 2002, a decrease of $14.3 million or 47.4 percent. This decrease in
income is the result of a 192 basis point reduction in the taxable-equivalent
yield and a $227.7 million decrease in average securities. The investment
securities portfolio taxable-equivalent yield decreased from 4.52 percent for
the quarter ended March 31, 2002, to 2.60 percent for the quarter ended March
31, 2003, the result of lower rates on newly-acquired securities when compared
to maturing securities. The short maturity of our investment securities
portfolio causes rapid repricing of the portfolio during periods of significant
changes in interest rates.
Interest income from overnight investments was $1.79 million during the
first quarter of 2003, unchanged from the first quarter of 2002. Although
average overnight investments increased $180.4 million or 40.8 percent to $622.1
million, the yield on average overnight investments fell 47 basis points to 1.17
percent, offsetting the benefit of the volume growth. The yield reduction was
due to lower market interest rates.

INTEREST-BEARING LIABILITIES.
At March 31, 2003 and 2002, interest-bearing liabilities totaled $9.29
billion and $9.10 billion, respectively, compared to $9.30 billion as of
December 31, 2002. During the first quarter of 2003, interest-bearing
liabilities averaged $9.17 billion, an increase of $99.9 million or 1.1 percent
from the first quarter of 2002. This increase resulted from higher balances of
interest-bearing deposits. No deposits have been acquired or divested during
2003.
Deposits. At March 31, 2003, total deposits were $10.59 billion, an
increase of $721.4 million or 7.3 percent over March 31, 2002. Compared to the
December 31, 2002 balance of $10.44 billion, total deposits have increased
$154.8 million. Noninterest-bearing deposits equaled $1.99 billion at March 31,
2003, up $377 million or 14.1 percent from March 31, 2002.
Interest-bearing deposits averaged $8.49 billion during the first quarter
of 2003 compared to $8.21 billion during the first quarter of 2002, an increase
of $284.3 million or 3.5 percent, due primarily to growth among money market
accounts. Average money market accounts increased $473.1 million or 22.6 percent
from first quarter of 2002 to the first quarter of 2003. Average Checking With
Interest increased $96.9 million or 7.9 percent for the first quarter of 2002 to
the same period of 2003. These increases were offset by lower time deposits.
Average time deposits decreased $323.2 million or 7.6 percent to $3.94 billion
from March 31, 2002 to March 31, 2003.
We attribute the growth in both noninterest-bearing and interest-bearing
deposits to our focus on deposit gathering and retention required to fund loan
demand in our market areas. Additionally, deposit growth has resulted from
investors seeking the safety of traditional bank deposits due to continued
volatility within the equity markets. However, the changes within specific types
of deposits represent significant shifts in the mix of our interest-bearing
deposits. During the first quarter of 2002, average time deposits represented
51.9 percent of total interest-bearing deposits, while average money market
accounts housed 25.5 percent of interest-bearing deposits. During the first
quarter of 2003, time deposits declined to 46.4 percent, while average money
market accounts increased to represent 30.3 percent of total deposits.
The shift away from time deposits in favor of less restrictive transaction
and money market accounts results from the low market interest rates currently
offered on time deposit products. Although it is unclear how long the economic
uncertainty will continue to adversely affect the equity markets, we continue to
focus our efforts on providing competitive deposit products to attract and
retain core deposit relationships. Accordingly, we anticipate continued growth
in deposits, although we expect time deposits will continue to contract until
interest rates return to more historically normal levels.
Time deposits of $100,000 or more averaged 10.44 percent of total deposits
during the first quarter of 2003, compared to 11.54 percent during the same
period of 2002.
Short-term borrowings. At March 31, 2003, short-term borrowings totaled
$438.4 million compared to $462.6 million at December 31, 2002 and $558.0
million at March 31, 2002. For the quarters ended March 31, 2003 and 2002,
short-term borrowings averaged $428.4 million and $582.2 million, respectively.
The decline in short-term borrowings is primarily the result of reductions among
master notes and overnight repurchase obligations. Customer interest in these
products has diminished due to the very low market rates of interest being paid
on these commercial cash management products.
Long-term obligations. At March 31, 2003 and 2002, long-term obligations
totaled $253.4 million and $284.0 million, respectively. In each case, the
outstanding balance includes $250 million in trust preferred capital securities:
$150 million that were issued in 1998 and $100 million that were issued in
October of 2001. The March 31, 2002 balance also includes $30 million in
borrowings that were repaid during the second quarter of 2002. During the first
quarter of 2003, long-term obligations averaged $253.4 million, compared to
$284.0 million during 2002.
Expense on Interest-Bearing Liabilities. BancShares' interest expense
amounted to $42.2 million during the first quarter of 2003, a $17.0 million or
28.7 percent decrease from the first quarter of 2002. The lower interest expense
was the result of lower market interest rates. The rate on average
interest-bearing liabilities was 1.86 percent during 2003, a 78 basis point
decrease in the aggregate blended rate on interest-bearing liabilities. The rate
on average liabilities was 2.64 percent during the first quarter of 2002.

NET INTEREST INCOME
Net interest income totaled $88.9 million during the first quarter of 2003,
a decrease of $8.1 million or 8.3 percent from the first quarter of 2002. The
deterioration in net interest income results from interest rate reductions.
Although growth among average interest-earning assets of $388 million
contributed to a favorable volume variance during the first quarter of 2003 when
compared to the same period of 2002, the unfavorable impact of lower interest
rates more than offset the benefit of volume growth. The taxable-equivalent net
yield on interest-earning assets was 3.37 percent for the first quarter of 2003,
compared to 3.81 percent achieved for the first quarter of 2002. The taxable
equivalent interest rate spread for the first quarter of 2003 was 3.09 percent
compared to 3.47 percent for the same period of 2002. While downward adjustments
have impacted both the yield on interest-earning assets and the rate on
interest-bearing liabilities, the extremely low level to which interest rates
have fallen has not allowed us to adjust the interest rates paid on many deposit
products in a similar magnitude as that which our interest-earning assets were
affected.
At current interest rate levels, we anticipate continued reductions in net
interest income when compared to 2002. This general trend of declining net
interest income is expected to continue until market interest rates begin to
increase or until economic conditions improve sufficiently to allow the
resumption of high levels of loan growth .
Despite the current pressure on net interest income, our asset/liability
management function continues to focus on maintaining high levels of balance
sheet liquidity and managing our interest rate risk. Management maintains
portfolios of interest-earning assets and interest-bearing liabilities with
maturities or repricing opportunities that will protect against wide interest
rate fluctuations, thereby limiting, to the extent possible, the ultimate
interest rate exposure. Management is aware of the potential negative impact
that movements in market interest rates may have on net interest income.
Market risk is the potential economic loss resulting from changes in market
prices and interest rates. This risk can either result in diminished current
fair values or reduced net interest income in future periods. As of March 31,
2003, BancShares' market risk profile has not changed significantly from
December 31, 2002. Changes in fair value that result from movement in market
rates can not be predicted with any degree of certainty. Therefore, the impact
that future changes in market rates will have on the fair values of financial
instruments is uncertain.

ASSET QUALITY
Reserve for loan losses. Management continuously analyzes the growth and
risk characteristics of the total loan portfolio under current economic
conditions in order to evaluate the adequacy of the reserve for loan losses.
Such factors as the financial condition of the borrower, fair market value of
collateral and other considerations are recognized in estimating probable credit
losses. At March 31, 2003, the reserve for loan losses amounted to $113.4
million or 1.47 percent of loans outstanding. This compares to $112.5 million or
1.48 percent at December 31, 2002, and $108.7 million or 1.50 percent at March
31, 2002.
The provision for loan losses charged to operations during the first
quarter of 2003 was $5.6 million, compared to $6.0 million during the first
quarter of 2002. The $417,000 decrease in the provision for loan loss during
2003 primarily resulted from lower loan loss estimates. Net charge-offs of loans
during the first quarter of 2003 were $4.7 million compared to $4.4 million
during the first quarter of 2002. On an annualized basis, these net charge-offs
represent 0.25 percent of average loans outstanding during both periods.
Management remains committed to maintaining high levels of credit quality. Table
5 provides details concerning the reserve and provision for loan losses over the
past five quarters.
Nonperforming assets. At March 31, 2003, BancShares' nonperforming assets
amounted to $25.1 million or 0.33 percent of gross loans plus foreclosed
properties, compared to $22.9 million at December 31, 2002, and $30.2 million at
March 31, 2002. Despite some volatility in the amount of nonperforming assets in
recent quarters, we view the current levels of nonperforming assets as evidence
of strong asset quality. Management continues to closely monitor nonperforming
assets, taking necessary actions to minimize potential exposure to losses. We
anticipate that the level of nonperforming assets will not decline until
consistently positive trends in economic activity are evident.
Management considers the established reserve adequate to absorb estimated
probable losses that relate to loans outstanding at March 31, 2003. While
management uses available information to establish provisions for loan losses,
future additions to the reserve may be necessary based on changes in economic
conditions or other factors. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the reserve for
loan losses. These agencies may require the recognition of adjustments to the
reserve based on their judgments of information available to them at the time of
their examination.

NONINTEREST INCOME
During the first three months of 2003, noninterest income was $56.4
million, compared to $54.2 million during the same period of 2002. The $2.2
million or 4.0 percent increase was due to growth in cardholder and merchant
services income, mortgage income and commission-based income, partially offset
by other than temporary impairment losses recognized on investment securities
available for sale during 2003.
During the first three months of 2003, cardholder and merchant services
income increased $1.4 million or 12.5 percent, reaching $12.4 million compared
to $11.0 million during the same period a year ago. This increase resulted from
higher interchange income for credit and debit card transactions as well as
growing income from merchant services. We continue to project growth in credit
and debit card transaction volumes, although we anticipate that recent disputes
between card issuers and merchants will result in a lower interchange rate. Our
merchant network continues to grow as the number of merchant services providers
continues to decline, a trend we expect will continue during 2003.
Prompted by the historically low interest rates available for residential
mortgage loans, refinance activity remained extremely strong during the first
quarter of 2003, and we recorded a 24.3 percent increase in mortgage income.
Mortgage income totaled $4.1 million compared to $3.3 million earned during the
same period of 2002. Subject to the impact changes in interest rates may have on
refinance activity, we anticipate mortgage originations will remain brisk and
that income derived from the mortgage operation will continue to exceed 2002
levels.
Commission-based income increased $685,000 or 12.8 percent to $6.0 million
during the first three months of 2003, compared to $5.3 million during the same
period of 2002. First Citizens Investor Services and FCB's insurance agency
operations continue to expand their customer bases, generating higher levels of
commission income, a trend we expect to continue throughout 2003.
Fees from processing services increased 9.7 percent during the first
quarter of 2003, primarily due to volume growth among transactions processed for
client banks. Subject to continued growth among banks to whom we provide
processing services, we expect these revenues will continue to increase.
During the first quarter of 2003, we recognized securities losses of
$975,000, all of which relates to other than temporary impairment losses
recognized on our investment securities available for sale due to sustained
reductions in market value. Given continued weakness in equity market values,
there may be further other than temporary impairment of investment securities,
although we are unable to estimate the likelihood or the possible amount of
those losses at this time.
Service charge income was unchanged from 2002, and we expect little growth
in service charge income during 2003. Trust income declined 6.8 percent during
the first quarter of 2003, continuing the 2002 trend. To the extent that our
fees derived from many accounts are tied to asset values, the reduction in the
market value of assets under management has resulted in an adverse impact on
trust income.

NONINTEREST EXPENSE
Noninterest expense was $111.3 million for the first three months of 2003,
a 4.1 percent increase over the $106.9 million recorded during the same period
of 2002. Much of the $4.4 million increase in total noninterest expense relates
to personnel and equipment expenses.
Salaries and wages increased $1.5 million or 3.1 percent during 2003 when
compared to the same period of 2002, primarily due to an expanded workforce
required in new markets and incentive compensation costs. Employee benefits
increased $942,000 to $11.5 million for the first three months of 2003. This 8.9
percent increase in employee benefits was the result of higher pension costs
that resulted from a reduction in the discount rate used to estimate future
obligations, asset losses and reductions in estimated future returns on pension
plan assets.
Equipment expense increased $1.4 million or 12.9 percent to $12.0 million
for the first quarter of 2003 when compared to the same period in 2002. Much of
the increase in equipment expense relates to software costs, including
depreciation of capitalized software, maintenance costs and rental expenses.
Occupancy expense was $9.7 million during the first quarter of 2003 and $9.0
million during the first quarter of 2002. The $723,000 or 8.0 percent increase
resulted from higher building depreciation expense.

INCOME TAXES
Income tax expense amounted to $10.2 million during the three months ended
March 31, 2003, compared to $13.5 million during the same period of 2002. The
24.8 percent decrease in income tax expense was the result of lower pretax
income. The effective tax rates for these periods were 35.7 percent and 35.3
percent, respectively.

LIQUIDITY
Management relies on the investment securities portfolio as a source of
liquidity. Those securities designated as available-for-sale may be sold as
needed to support liquidity demands, while maturities of held-to-maturity
securities are staggered to provide ongoing access to further liquidity.
Additionally, deposits generated throughout the branch network provide funding
for asset growth. In the event additional liquidity is needed, we maintain
readily available sources to borrow funds through our correspondent bank
network.

SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
BancShares maintains an adequate capital position and exceeds all minimum
regulatory capital requirements. At March 31, 2003 and 2002, the leverage
capital ratios of BancShares were 9.30 percent and 8.99 percent, respectively,
surpassing the minimum level of 3 percent. As a percentage of risk-adjusted
assets, BancShares' Tier 1 capital ratios were 13.44 percent at March 31, 2003
and 13.20 percent at March 31, 2002. The minimum ratio allowed is 4 percent of
risk-adjusted assets. The total risk-adjusted capital ratios were 14.77 percent
at March 31, 2003 and 14.53 percent as of March 31, 2002. The minimum total
capital ratio is 8 percent. BancShares and its subsidiary banks exceed the
capital standards established by their respective regulatory agencies.

SEGMENT REPORTING
BancShares conducts its banking operations through two wholly-owned
subsidiaries, FCB and ASB. Although FCB and ASB offer similar products and
services to customers, each entity operates in distinct geographic markets and
each entity has separate management groups. Additionally, the financial results
and trends of ASB reflect the de novo nature of its operation.
Atlantic States Bank. ASB's total assets increased from $880.8 million at
March 31, 2002 to $1.10 billion at March 31, 2003, an increase of $215.1 million
or 24.4 percent. This growth resulted from loan growth generated by the
expanding geographic presence of its branch network. ASB's net interest income
increased $2.6 million or 38.9 percent during the first three months of 2003,
when compared to the same period of 2002, the result of balance sheet growth
that more than offset the impact of falling interest rates. Provision for loan
losses declined $869,000 or 81.6 percent due to reduced loan growth and lower
loss estimates during 2003.
ASB's noninterest income increased $15,000 or 1.2 percent during the first
three months of 2003, the net result of higher service charge income and
cardholder and merchant services income, largely offset by reductions in
mortgage income. Noninterest expense increased $2.0 million or 24.8 percent
during 2003. Higher personnel, occupancy and equipment costs reflect the impact
of the expanded branch network, much of which relates to the expansion of ASB
into Texas, Arizona and California.
ASB recorded net income of $67,000 during the first three months of 2003
compared to a net loss of $876,000 during the same period of 2002. This
represents a favorable variance of $943,000, primarily the result of ASB's
balance sheet growth and lower provision for loan losses . Substantially all of
ASB's growth has been on a de novo basis, and ASB continues its efforts to build
a customer base in its highly competitive markets. We continue to seek new
growth opportunities for ASB, in new and existing markets. Our initial
investments in these markets will result in higher levels of noninterest expense
in ensuing quarters.
First Citizens Bank. FCB' total assets increased from $10.62 billion at
March 31, 2002 to $11.20 billion at March 31, 2003, an increase of $580.9
million or 5.5 percent. FCB' net interest income decreased $9.3 million or 9.9
percent during the first three months of 2003, the result of a significant
reduction in the net yield on interest-earning assets. Provision for loan losses
increased $452,000 or 9.2 percent due to higher net charge-offs.
FCB's noninterest income increased $2.9 million or 5.3 percent during the
first three months of 2003, primarily the result of higher cardholder and
merchant services income and mortgage income. Noninterest expense increased $1.6
million or 1.6 percent during the first three months of 2003, primarily due to
higher personnel costs. FCB recorded net income of $22.0 million during the
first three months of 2003 compared to $27.6 million during the same period of
2002. This represents a $5.6 million or 20.2 percent reduction in net income.

CURRENT ACCOUNTING AND REGULATORY ISSUES
Effective January 1, 2002, BancShares adopted the provisions of Statement
142, which modified our accounting for goodwill and intangible assets.
Previously, our capitalized intangible assets were amortized over their
estimated useful lives, and the amortization expense related to those assets was
included within noninterest expense. Upon adoption of Statement 142, we
discontinued amortization of all amounts that we had previously classified as
goodwill. We continued to amortize all other intangible assets over their
estimated useful lives.
During the fourth quarter of 2002, we adopted Statement 147, although we
were required to apply certain provisions of Statement 147 retroactively to the
date we adopted Statement 142. Guidance within Statement 147 resulted in the
reclassification to goodwill of certain amounts previously recorded as
intangible assets. Statement 147 required the reversal of any amortization
expense recorded on those reclassified assets since the adoption of Statement
142. Accordingly, amortization expense initially recorded during the first,
second and third quarters of 2002 was reversed during the fourth quarter, and
prior periods have been restated to reflect that change.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections
(Statement 145). Statement 145 amends existing guidance on reporting gains and
losses on the extinguishment of debt to prohibit the classification of the gain
or loss as extraordinary. Statement 145 also amends SFAS No. 13 to require
sale-leaseback accounting for certain lease modifications that have economic
effects similar to sale-leaseback transactions. The adoption of Statement 145
for transactions occurring after May 15, 2002 did not have a material effect on
our consolidated financial statements.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (Statement 146), which becomes
effective prospectively for exit or disposal activities initiated after December
31, 2002. Under Statement 146, we will record a liability for a cost associated
with an exit or disposal activity when that liability is incurred and can be
measured at fair value. In periods after initially recording a liability, we
will adjust the liability to reflect revisions to the expected timing or amount
of estimated cash flows, discounted at the appropriate interest rate originally
used to measure the liability. Statement 146 also establishes accounting
standards for employee and contract termination costs. The impact from the
adoption of Statement 146 is dependent on the nature and extent of exit and
disposal activities. Consequently, at this time, we are unable to estimate the
ultimate impact from the adoption of Statement 146.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34 (Interpretation
45). Interpretation 45 elaborates on the disclosures to be made by a guarantor
in its financial statements about its obligations under guarantees issued.
Interpretation 45 also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken. The initial recognition and measurement provisions of Interpretation
45 are applicable to guarantees issued or modified after December 31, 2002 and
did not have a material effect on our consolidated financial statements. The
disclosure requirements were effective for financial statements of interim and
annual periods ending after December 15, 2002.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of FASB Statement No. 123
(Statement 148). Statement 148 provides alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
SFAS 123 to require prominent disclosures in both annual and interim financial
statements. Certain of the disclosure modifications are required for fiscal
years ending after December 15, 2002. As we currently have no stock-based
compensation, the adoption of Statement 148 did not have a material impact on
our consolidated financial statements.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51 (Interpretation 46).
Interpretation 46 addresses the consolidation by business enterprises of
variable interest entities as defined in the Interpretation. Interpretation 46
applies immediately to variable interests in variable interest entities created
after January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The application of this Interpretation 46 is
not expected to have a material effect on our consolidated financial statements.
Management is not aware of any current recommendations by regulatory
authorities that, if implemented, would have or would be reasonably likely to
have a material effect on liquidity, capital ratios or results of operations.

FORWARD-LOOKING STATEMENTS
This discussion may contain statements that could be deemed forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act, which statements are
inherently subject to risks and uncertainties. Forward-looking statements are
statements that include projections, predictions, expectations or beliefs about
future events or results or otherwise are not statements of historical fact.
Such statements are often characterized by the use of qualifying words (and
their derivatives) such as "expect," "believe," "estimate," "plan," "project,"
"anticipate," or other statements concerning opinions or judgments of BancShares
and its management about future events. Factors that could influence the
accuracy of such forward-looking statements include, but are not limited to, the
financial success or changing strategies of BancShares' customers, actions of
government regulators, the level of market interest rates, and general economic
conditions.

Exhibit 99

CERTIFICATION

The undersigned hereby certifies that, to his or her knowledge, (i) the
Form 10-Q filed by First Citizens BancShares, Inc. (the "Issuer") for the
quarter ended March 31, 2003, fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information
contained in that report fairly presents, in all material respects, the
financial condition and results of operations of the Issuer on the dates and for
the periods presented therein.

May 13, 2003 /s/ Lewis R. Holding
Lewis R. Holding
Chairman and Chief Executive Officer

/s/ Kenneth A. Black
Kenneth A. Black
Vice President and Chief Financial Officer