Charter of the Audit and Compliance Committee of the Board of Directors of First Citizens BancShares Inc. and First-Citizens Bank & Trust Company

As approved by the Boards of Directors on July 23, 2007

Purpose

The Audit and Compliance Committee of the Board of Directors of First Citizens BancShares, Inc. ("FCBS") and First-Citizens Bank & Trust Company ("FCBT"), and of IronStone Bank ("IronStone") (the "Audit and Compliance Committee"), shall be appointed jointly by the Boards of Directors of FCBS and FCBT to assist the Boards of Directors of FCBS, FCBT, and IronStone (collectively, the "Companies") in fulfilling their oversight responsibilities and to perform the duties of an independent Audit and Compliance Committee of each of the Companies.

Limitation

While the Audit and Compliance Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit and Compliance Committee to plan or conduct audits or to ensure that the Companies' financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Each member of the Audit and Compliance Committee shall be entitled to rely on the advice, expertise and integrity of those persons and organizations within and outside the Companies that provide information to the Audit and Compliance Committee and the accuracy and completeness of the financial and other information provided to the Audit and Compliance Committee by such persons or organizations, absent actual knowledge that such reliance is not reasonable or warranted.

Authority

The Audit and Compliance Committee shall have the authority to:

Employ, discharge, compensate, and oversee the work of independent auditors selected by the Audit and Compliance Committee to conduct the annual audit of FCBS' consolidated financial statements. This independent audit firm shall report directly to the Audit and Compliance Committee.¹
Resolve any disagreements between management and the independent auditors regarding financial reporting or any other matter.²
Retain, at its discretion and without management or the Board's prior permission, independent counsel, accountants, or others to advise the Audit and Compliance Committee or assist it in carrying out its duties, and to direct the Companies to pay reasonable compensation for such services at the Companies' expense.³
Seek any information it requires from employees - all of whom are directed to cooperate with the Audit and Compliance Committee's requests - or external parties.
Meet with company officers, independent auditors, or outside counsel, as necessary.⁴

To the extent not inconsistent with other sections of this Charter or applicable laws or regulations, the Audit and Compliance Committee may delegate authority to subcommittees or individual members.⁵

Composition

The Audit and Compliance Committee shall consist of at least three⁶ and no more than seven members of the Board. Each member of the Audit and Compliance Committee shall (i) be an "independent director" of FCBS under regulations of the Securities and Exchange Commission and the listing requirements of The Nasdaq Stock Market (except to the extent otherwise permitted by those regulations or requirements), and (ii) be able to read and understand fundamental financial statements. No person shall be appointed as an Audit and Compliance Committee member if he or she owns or controls 10% or more of FCBS' voting securities. No Audit and Compliance Committee member shall simultaneously serve on the audit committees of more than two other public companies.²⁶

The Boards of FCBS and FCBT shall appoint Audit and Compliance Committee members and the Audit and Compliance Committee Chair for terms of one year or until their successors shall be elected, whichever is longer; provided, however, that the term of an Audit and Compliance Committee member shall end upon his or her death or resignation, the termination of the member's service as a director of FCBS, or the occurrence of any event that causes the member to no longer qualify to serve as a Director of FCBS or to be eligible to continue as a member of the Audit and Compliance Committee. The Board, in its discretion, may designate an Audit and Compliance Committee member as an "Audit and Compliance Committee financial expert." The Audit and Compliance Committee financial expert is an Audit and Compliance Committee member who has the experience and knowledge that, in the judgment of the Board, qualifies him or her to be so designated under the regulations of the Securities and Exchange Commission.⁷ At least two members of the Audit and Compliance Committee shall have banking or related financial management expertise sufficient to comply with applicable regulations of the Federal Deposit Insurance Corporation.⁸

Meetings

The Audit and Compliance Committee shall meet at least four times per year, and it shall have the authority to convene additional meetings, as circumstances require. All committee members are expected to attend each meeting, in person or via tale-, tele-, or video-conference. It shall meet separately and independently, on a periodic basis, with management and with the Companies' General Counsel, internal auditors and independent auditors.⁹ It shall also meet periodically in executive session. Appropriate briefing materials shall be prepared and provided in advance to members. Minutes of all meetings shall be prepared and maintained.

Responsibilities

The Audit and Compliance Committee shall carry out the following duties and responsibilities:

General

Monitor the integrity of the financial reporting process and systems of internal controls of the Companies regarding finance, accounting, and legal compliance.
Monitor and oversee the independence and performance of the independent auditors.
Review the internal Audit Department and set the Audit Plan for each year. The senior internal audit executive (the "General Auditor") shall report for substantive purposes to the Audit and Compliance Committee.
Pre-approve all audit and permitted non-audit services performed by the Companies' independent auditors¹⁰ in accordance with approval policies and procedures adopted by the Audit and Compliance Committee from time to time.¹¹
Provide for free and open communication among the independent auditors, management, the internal Audit Department, and the Board.
Monitor the Companies' compliance with applicable banking laws and regulations regarding safety and soundness.
Exercise independent judgment in carrying out its responsibilities.

Financial Statements

Review and discuss with management and the independent auditors significant accounting and reporting issues, including:
- All critical accounting policies and practices to be used;
- All alternative treatments of financial information with generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors;
- Other written material communications between the independent auditors and management; and,¹²
- The effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements.²⁷
Review and discuss analyses prepared by management and/or the independent auditors setting forth significant financial reporting issues, complex or unusual transactions, and highly judgmental areas made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.¹³
Review and discuss FCBS' annual audited and quarterly unaudited financial statements with management and the independent auditors.
Review and discuss disclosures made by CEO and CFO during the Forms 10-K and 10-Q certification process about significant deficiencies in the design or operation of internal controls or any fraud that involves management or other employees who have a significant role in the Company's internal controls.¹⁴
Review and discuss quarterly earnings press releases.
In connection with the annual audit of FCBS' consolidated financial statements and the filing of its Form 10-K:
- Discuss with the independent auditors the matters required to be discussed by SAS 61;
- Receive written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1, and discuss the independence of the independent auditors with them;
- Based on its review of FCBS' consolidated financial statements with management and the independent auditors and the additional discussions described above, recommend to FCBS' Board of Directors whether the financial statements be included in the Form 10-K.¹⁵

Internal Control

Review, discuss and evaluate with management:
- The Companies' internal control structure and procedures for financial reporting.
- All significant deficiencies in the design or operation of internal controls which could adversely affect the Companies' ability to record, process, summarize and report financial data, and any material weaknesses in internal controls, disclosed by management to the Audit and Compliance Committee or the Companies' independent auditors.
- Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companies' internal controls.¹⁶

Internal Audit

Review with the General Auditor the plans, activities, staffing, and organizational structure of the internal Audit Department.
Ensure there are no unjustified restrictions or limitations on the internal audit function.
Review the effectiveness of the internal audit function.
Review and discuss significant findings that have been reported to management and the progress of the related corrective action plans.
On a regular basis, meet separately with the General Auditor to discuss any matters that the Audit and Compliance Committee or the General Auditor believes should be discussed privately.
Executive management shall provide administrative oversight of the internal audit function after consultation and approval from the Audit and Compliance Committee, including:
- Appointing, evaluating, and replacing the General Auditor;
- Setting the Audit Department's annual budget; and
- Establishing the person to whom the General Auditor reports administratively.

Independent Audits

Review the independent auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.
Review the performance of the independent auditors.¹⁷
Ensure the rotation of the lead audit partner every five years and other audit partners every seven years, and consider whether there should be regular rotation of the audit firm itself.¹⁸
Recommend to the Board clear hiring policies for employees or former employees of the independent auditors, which guidelines shall comply with the requirements of applicable law and regulation.¹⁹
Discuss with the national office of the independent auditors issues on which they were consulted by the Companies' audit team as well as matters relating to the Companies' audit quality and consistency.²⁰
Resolve disagreements between management and the independent auditors regarding financial reporting.²¹

Compliance

Establish procedures for: (i) the receipt, retention, and treatment of complaints received by the Companies regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of the Companies of concerns regarding questionable accounting or auditing matters.²²
Review the findings of any examinations by regulatory agencies and any observations by the examining agency.
On at least an annual basis, review with the counsel of the Companies any legal matters that could have a significant impact on the organization's financial statements, compliance with applicable laws and regulations, as well as inquiries received from regulators or governmental agencies.

Reporting Responsibilities

Prepare an annual report to the Board and the shareholders that shall describe the Committee's composition, responsibilities, how those responsibilities are discharged, and report its findings.
Review any other reports any of the Companies that relate to Audit and Compliance Committee responsibilities.

Other Responsibilities

Perform other activities related to this charter as requested by the Board.
Institute and oversee special investigations as needed.
Review and assess the adequacy of the Audit and Compliance Committee charter annually, requesting Board approval for proposed changes, and ensure appropriate disclosure as may be required by law or regulation.²³
Confirm annually to the Board that all responsibilities outlined in this charter have been carried out.
Evaluate the Audit and Compliance Committee's performance at least annually.²⁸

¹ SOX 301; NASDAQ 4530.d.1.D.ii; SEC 210.2-01(c)(7)
² SOX 301
³ SOX 301; NASDAQ 4530.d.1.D.iv
⁴ NYSE
⁵ SOX 202
⁶ NASDAQ 4530.d
⁷ SOX 301; SOX 407; NASDAQ IM-4530.d
⁸ FDIC 12 CFR Part 363
⁹ NYSE
¹⁰ SOX 202; NASDAQ 4530.d.1.D.i; SEC 210.2-01(c)(7)
¹¹ Audit and Non-Audit Services Pre-Approval Policy
¹² SOX 204; SEC 210.2-07
¹³ SEC 210.2-07
¹⁴ SOX 302
¹⁵ 17 CFR 228.306
¹⁶ SOX302; SEC 240.13a-14
¹⁷ SOX 301
¹⁸ SEC 210.2-01(c)(6)
¹⁹ SEC 210.2-01(c)(2)(iii)
²⁰ NYSE (b)(ii)(H)
²¹ SOX 301(m)(2)
²² SOX 310; NASDAQ 4530.d.1.D.iii
²³ NASDAQ 4530.d.1
²⁶ Commentary to NYSE subsection 6
²⁷ Commentary to NYSE subsection 7(b)(iii)
²⁸ NYSE subsection 7(b)(iii)

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