First Citizens Reports Earnings for Third Quarter 2003

October 27, 2003

RALEIGH, N.C. - First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings for the quarter ending Sept. 30, 2003, of $20.3 million compared to $23.8 million for the corresponding period of 2002, a reduction of 14.7 percent, according to Lewis R. Holding, chairman of the board.

Per share income for the third quarter 2003 totaled $1.94 compared to $2.27 for the same period a year ago. First Citizens’ results generated an annualized return on average assets of 0.66 percent for the third quarter of 2003, compared to 0.80 percent for the same period of 2002. The annualized return on average equity was 8.03 percent during the current quarter, compared to 10.09 percent for the same period of 2002.

During the third quarter, a reduction in net interest income and higher noninterest expenses more than offset the favorable impact of improved noninterest income and lower income tax expense. During the third quarter of 2003, net interest income decreased $5.3 million or 5.5 percent from the same period of 2002. The reduction in net interest income was due to the unfavorable impact of lower interest rates on interest-earning assets. The taxable-equivalent yield on interest-earning assets fell 104 basis points to 4.51 percent during the third quarter of 2003 when compared to the same period of 2002, while the rate on total interest-bearing liabilities fell 76 basis points to 1.50 percent. The taxable-equivalent net yield on interest-earning assets fell from 3.60 percent for the third quarter of 2002 to 3.28 percent for the third quarter of 2003. Average interest-earning assets increased $401.9 million or 3.8 percent during the third quarter of 2003 when compared to the same period of 2002.

Noninterest expense increased $10.3 million or 9.5 percent during the third quarter of 2003. Salary expense increased $3.8 million or 7.9 percent during 2003 due to the continued expansion of Atlantic States Bank’s franchise and higher incentive-based compensation. Employee benefit expense increased $1.3 million or 12.2 percent due to higher pension expense and health insurance costs. Equipment expense increased $2.0 million or 17.6 percent, the result of higher depreciation and maintenance costs from continuing technology investments.

Noninterest income increased $7.6 million or 13.7 percent during the third quarter, the result of strong refinance activity. Mortgage income increased $2.5 million or 88.7 percent from the third quarter of 2002. Cardholder and merchant services income increased $1.9 million or 14.5 percent due to favorable volume growth. Income tax expense during the third quarter was $7.9 million for 2003 and $13.2 million for 2002. The $5.3 million or 39.9 percent reduction was primarily due to lower pre-tax income and adjustments to valuation reserves for deferred taxes.

The provision for loan losses increased $761,000 or 13.6 percent from the third quarter of 2002 to the same period of 2003 due to higher loss estimates following recent loan growth. Net charge-offs were $4.0 million during the third quarter of 2003, compared to $4.5 million during the same period of 2002, an 11.1 percent reduction.

For the nine-month period ending Sept. 30, 2003, net income was $59.4 million, or $5.68 per share, compared to $73.4 million, or $7.01 per share earned during the same period of 2002. Annualized net income for 2003 represents 0.65 percent of average assets compared to 0.83 percent for 2002. The annualized return on average equity was 8.02 percent for the first nine months of 2003, compared to 10.72 percent for the same period of 2002.

Year-to-date net interest income for 2003 decreased $20.5 million or 7.1 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 3.70 percent to 3.32 percent during 2003.

Noninterest income increased $21.4 million or 12.9 percent during the first nine 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 $24.9 million or 7.7 percent during the first nine months of 2003, the result of higher personnel expenses as well as higher equipment and occupancy costs.

For the nine-month period ending Sept. 30, the provision for loan losses was $19.1 million and $19.4 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 $13.9 million and $14.9 million during the respective nine-month periods, a reduction of $1.0 million or 6.8 percent during 2003. Year-to-date net charge-offs represent 0.24 percent of average loans outstanding during 2003, compared to 0.27 percent for the same period of 2002.

As of Sept. 30, 2003, First Citizens had total assets of $12.4 billion. First Citizens Bank has 348 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 September 30		Nine Months Ended September 30
	2003	2002	2003	2002
Interest Income	$124,887	$147,742	$385,134	$455,661
Interest expense	34,573	52,127	116,236	166,306
Net interest Income	90,314	95,615	268,898	289,355
Provision for loan losses	6,353	5,592	19,108	19,394
Net interest income after provision for loan losses	83,961	90,023	249,790	269,961
Noninterest Income	63,205	55,571	186,540	165,155
Noninterest expense	118,947	108,614	346,204	321,335
Income before income taxes	28,219	36,980	90,126	113,781
Income taxes	7,922	13,190	30,763	40,366
Net Income	$20,297	$23,790	$59,363	$73,415
Taxable-equivalent net interest income	$90,568	$95,932	$269,694	$290,388
Net income per share	$1.94	$2.27	$5.68	$7.01
Cash dividends per share	0.275	0.250	0.825	0.750
Profitability Information (annualized)
Return on average assets	0.66%	0.80%	0.65%	0.83%
Return on average equity	8.03	10.09	8.02	10.72
Taxable-equivalent net yield on interest-earning assets	3.28	3.60	3.32	3.70

CONDENSED BALANCE SHEETS
(thousand, except share data; unaudited)	September 30 2003	December 31 2002	September 30 2002
Cash and due from banks	$790,166	$811,657	$801,450
Investment securities	2,646,829	2,539,236	2,502,026
Loans	8,026,502	7,620,263	7,521,834
Reserve for loan losses	(117,747)	(112,533)	(111,577)
Other assets	1,041,531	1,373,267	1,373,419
Total assets	$12,387,281	$12,231,890	$12,087,152
Deposits	$10,563,135	$10,439,620	$10,286,825
Other liabilities	807,718	824,979	850,456
Shareholder's equity	1,016,428	967,291	949,871
Total liabilities and shareholder's equity	$12,387,281	$12,231,890	$12,087,152
Book value per shared	$97.39	$92.36	$90.67
Tangible book value per share	87.02	81.73	80.23

SELECTED AVERAGE BALANCES
(thousand, except share data; unaudited)	Three Months Ended September 30		Nine Months Ended September 30
	2003	2002	2003	2002
Total assets	$12,287,273	$11,871,334	$12,177,404	$11,764,711
Investment securities	2,665,203	2,553,957	2,579,562	2,632,761
Loans	7,946,501	7,450,271	7,801,418	7,324,359
Interest-earning assets	10,994,308	10,592,386	10,876,224	10,480,111
Deposits	10,441,989	10,060,785	10,373,902	9,925,071
Interest-bearing liabilities	9,126,076	9,131,569	9,159,017	9,093,797
Shareholder's equity	$1,002,712	$935,735	$989,121	$915,387
Shares Outstanding	10,436,345	10,477,886	10,457,976	10,480,011

ASSET QUALITY
(thousand, unaudited)	September 30 2003	December 31 2002	September 30 2002
Nonaccrual loans	$13,494	$15,521	$14,944
Other real estate	6,827	7,330	12,092
Total nonperforming assets	$20,321	$22,851	$27,036
Accuring loans 90 days or more past due	$11,840	$9,566	$8,928
Net charge-offs (year-to-date)	$13,894	$21,104	$14,904
Nonperforming assets to gross loans plus foreclosed real estate	0.25%	0.30%	0.36%
Reserve for loan losses to gross loans	1.47	1.48	1.48
Net charge-offs to average total loans(annualized, year-to-date)	0.24	0.29	0.27

CAPITAL INFORMATION
(dollars in thousands, unaudited)	September 30 2003	December 31 2002	September 30 2002
Tier 1 capital	$1,147,124	$1,096,537	$1,084,714
Total capital	1,262,501	1,204,142	1,191,150
Risk-weighted assets	8,618,154	8,123,321	8,086,739
Tier 1 capital ratio	13.31%	13.50%	13.41%
Total capital ratio	14.65	14.82	14.73
Leverage capital ratio	9.42	9.17	9.22
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