First Citizens Reports Earnings for Second Quarter 2003

July 28, 2003

RALEIGH, N.C. - First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings for the quarter ending June 30, 2003, of $20.8 million compared to $24.8 million for the corresponding period of 2002, a reduction of 16.2 percent, according to Lewis R. Holding, chairman of the board.

First Citizens’ earnings were negatively impacted by the current extreme interest rate environment. The historically low market rates adversely influenced the yields on the high levels of short-term, interest-sensitive liquidity maintained by First Citizens, resulting in lower levels of net interest income.

Per share income for the second quarter 2003 totaled $1.98 compared to $2.37 for the same period a year ago. First Citizens’ results generated an annualized return on average assets of 0.68 percent for the second quarter of 2003, compared to 0.85 percent for the same period of 2002. The annualized return on average equity was 8.41 percent during the current quarter, compared to 10.86 percent for the same period of 2002.

During the second quarter, a reduction in net interest income and higher noninterest expenses more than offset the favorable impact of higher noninterest income and lower provision for loan losses. During the second quarter of 2003, net interest income decreased $7.1 million or 7.3 percent from the same period of 2002. The reduction in net interest income resulted from the unfavorable net impact of lower interest rates on interest-earning assets and interest-bearing liabilities. The taxable-equivalent yield on interest-earning assets fell 104 basis points to 4.77 percent during the second quarter of 2003 when compared to the same period of 2002, while the rate on total interest-bearing liabilities fell 70 basis points to 1.73 percent. The taxable-equivalent net yield on interest-earning assets fell from 3.71 percent for the second quarter of 2002 to 3.31 percent for the second quarter of 2003. Total interest-earning assets increased $398.6 million or 3.8 percent during the second quarter of 2003 when compared to the same period of 2002.

Noninterest expense increased $10.3 million or 9.7 percent during the second quarter of 2003. Salary expense increased $4.7 million or 10.5 percent during 2003, due primarily to the continued expansion of Atlantic States Bank’s franchise and higher incentive-based compensation within the mortgage operation. Employee benefit expense increased $2.2 million or 22.3 percent due to higher pension expense and health insurance costs. Occupancy expense increased $1.3 million or 13.7 percent during the second quarter due to higher facility costs, while equipment expense increased $1.2 million or 10.5 percent, the result of technology investments.

Noninterest income increased $11.7 million or 21.1 percent during the second quarter. The second quarter of 2003 includes a $5.7 million nonrecurring gain on the sale of branches and $1.1 million in securities gains. Mortgage income increased $2.4 million from the second quarter of 2002 due primarily to heavy refinance activity. Cardholder and merchant services income increased $1.7 million or 13.4 percent due to favorable volume growth.

The provision for loan losses declined $630,000 or 8.1 percent from the second quarter of 2002 to the same period of 2003 due to lower net charge-offs. Net charge-offs were $5.2 million during the second quarter of 2003, compared to $6.0 million during the same period of 2002.

For the six-month period ending June 30, 2003, net income was $39.1 million, or $3.73 per share, compared to $49.6 million, or $4.73 per share earned during the same period of 2002. Annualized net income for 2003 represents 0.65 percent of average assets compared to 0.85 percent for 2002. The annualized return on average equity was 8.02 percent for the first six months of 2003, compared to 11.05 percent for the same period of 2002.

Year-to-date net interest income for 2003 decreased $15.2 million or 7.8 percent from the same period of 2002. During 2003, the unfavorable impact of lower interest rates more than offset the benefit of growth among interest-earning assets. The taxable-equivalent net yield on interest-earning assets fell from 3.76 percent to 3.34 percent during 2003.

Noninterest income increased $13.8 million or 12.6 percent during the first six months of 2003, the result of improved cardholder and merchant services income and mortgage income. Noninterest income also included a $5.7 million nonrecurring gain on the sale of branch offices. Noninterest expense increased $14.6 million or 6.9 percent during the first six months of 2003, the result of higher personnel expenses as well as higher equipment and occupancy costs.

For the six-month period ending June 30, the provision for loan losses was $12.8 million and $13.8 million for 2003 and 2002, respectively. The reduction in the provision for loan losses resulted from lower levels of net charge-offs. Net charge-offs were $9.9 million and $10.4 million during the respective six-month periods, a reduction of $512,000 or 4.9 percent during 2003.

As of June 30, 2003, First Citizens had total assets of $12.39 billion. First Citizens Bank has 338 branches in North Carolina, Virginia and West Virginia. Atlantic States Bank and its western division IronStone Bank have 46 branches in Georgia, Florida, Texas, Arizona and California. For more information, visit the First Citizens Web site at firstcitizens.com.

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CONDENSED STATEMENTS OF INCOME
(thousand, except share data; unaudited)	Three Months Ended June 30		Six Months Ended June 30
	2003	2002	2003	2002
Interest Income	$129,173	$151,771	$260,247	$307,919
Interest expense	$39,505	$55,042	$81,663	$114,179
Net interest Income	$89,668	$96,729	$178,584	$193,740
Provision for loan losses	$7,192	$7,822	$12,755	$13,802
Net interest income after provision for loan losses	$82,476	$88,907	$165,829	$179,938
Noninterest Income	$66,948	$55,369	$123,335	$109,584
Noninterest expense	$115,975	$105,815	$227,257	$212,721
Income before income taxes	$33,449	$38,461	$61,907	$76,801
Income taxes	$12,677	$13,659	$22,841	$27,175
Net Income	$20,772	$24,802	$39,066	$49,626
Taxable-equivalent net interest income	$89,926	$97,074	$179,126	$194,456
Net income per share	$1.98	$2.37	$3.73	$4.73
Cash dividends per share	0.275	0.25	0.55	0.50
Profitability Information (annualized)
Return on average assets	0.68%	0.85%	0.65%	0.85%
Return on average equity	8.41	10.86	8.02	11.05
Taxable-equivalent net yield on interest-earning assets	3.31	3.71	3.34	3.76

CONDENSED BALANCE SHEETS
(thousand, except share data; unaudited)	June 30 2003	December 31 2002	June 30 2002
Cash and due from banks	$810,546	$811,657	$814,540
Investment securities	2,475,821	2,539,236	2,464,779
Loans	7,857,220	7,620,263	7,434,662
Reserve for loan losses	(115,382)	(112,533)	(110,472)
Other assets	1,366,539	1,373,267	1,264,249
Total assets	$12,394,744	$12,231,890	$11,867,758
Deposits	$10,558,616	$10,439,620	$10,065,180
Other liabilities	836,339	824,979	872,403
Shareholder's equity	999,789	967,291	930,175
Total liabilities and shareholder's equity	$12,394,744	$12,231,890	$11,867,758
Book value per shared	$95.80	$92.36	$88.77
Tangible book value per share	85.36	81.73	78.28

SELECTED AVERAGE BALANCES
(thousand, except share data; unaudited)	Three Months Ended June 30		Six Months Ended June 30
	2003	2002	2003	2002
Total assets	$12,203,618	$11,756,150	$12,129,579	$11,710,516
Investment securities	2,594,983	2,641,898	2,536,032	2,672,816
Loans	7,811,739	7,312,384	7,727,674	7,260,359
Interest-earning assets	10,890,420	10,491,811	10,816,203	10,423,042
Deposits	10,394,829	9,934,615	10,339,295	9,856,089
Interest-bearing liabilities	9,177,931	9,075,549	9,175,761	9,074,598
Shareholder's equity	$991,047	$916,387	$982,879	$905,432
Shares Outstanding	10,465,909	10,480,527	10,468,970	10,481,091

ASSET QUALITY
(thousand, unaudited)	June 30 2003	December 31 2002	June 30 2002
Nonaccrual loans	$17,438	$15,521	$17,397
Other real estate	8,147	7,330	10,563
Total nonperforming assets	$25,585	$22,851	$27,960
Accuring loans 90 days or more past due	$7,848	$9,566	$9,945
Net charge-offs (year-to-date)	9,906	21,104	10,417
Nonperforming assets to gross loans plus foreclosed real estate	0.33%	0.30%	0.38%
Reserve for loan losses to gross loans	1.47	1.48	1.49
Net charge-offs to average total loans(annualized, year-to-date)	0.26	0.29	0.29

CAPITAL INFORMATION
(dollars in thousands, unaudited)	June 30 2003	December 31 2002	June 30 2002
Tier 1 capital	$1,128,565	$1,096,537	$1,062,303
Total capital	1,240,801	1,204,142	1,168,606
Risk-weighted assets	8,424,376	8,123,321	8,024,193
Tier 1 capital ratio	13.40%	13.50%	13.24%
Total capital ratio	14.73	14.82	14.56
Leverage capital ratio	9.33	9.17	9.12
2002 data has been restated to reflect the adoption of Statement of Financial Accounting Standards No. 147, which was adopted during the fourth quarter of 2002 with a retroactive effective date of January 1, 2002.
First Citizens BancShare, Inc. and Subsidiaries

Barbara Thompson
(919) 716-2716
First Citizens Bank