First Citizens Reports Earnings for 2003

January 26, 2004

RALEIGH, N.C. — First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings for the year ending Dec. 31, 2003, of $75.2 million compared to $92.8 million for 2002, a reduction of $17.6 million or 18.9 percent, according to Lewis R. Holding, chairman of the board.

Per share income for 2003 totaled $7.19 compared to $8.85 for 2002. First Citizens’ results generated an annualized return on average assets of 0.61 percent during 2003. That compares to 0.78 percent for 2002. The annualized return on average equity was 7.54 percent in 2003, compared to 10.03 percent for 2002. The reduction in 2003 net income resulted from lower net interest income and higher noninterest expense. The impact of the reduction more than negated the benefit of higher noninterest income and lower provision for loan losses.

Net interest income for 2003 decreased $20.2 million or 5.3 percent from 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 3.63 percent in 2002 to 3.32 percent in 2003. Noninterest expense increased $33.1 million or 7.6 percent during 2003, the result of higher personnel expenses as well as higher equipment and occupancy costs related to new branches.

Noninterest income increased $24.0 million or 10.8 percent during 2003, due primarily to improved cardholder and merchant services income, higher mortgage income and a $5.7 million nonrecurring gain on the sale of branch offices. The provision for loan losses was $24.2 million in 2003, compared to $26.6 million in 2002, an 8.9 percent reduction. The decline was the result of lower levels of net charge-offs, which were lessened by the impact of loan growth. Net charge-offs were $17.8 million and $21.1 million during 2003 and 2002, a reduction of $3.3 million or 15.8 percent during 2003. Net charge-offs equaled 0.23 percent of average loans outstanding during 2003, compared to 0.29 percent for 2002.

First Citizens reported net income of $16.6 million for the quarter ending Dec. 31, 2003, compared to $19.3 million for the corresponding period of 2002, a reduction of 14.3 percent.

Per share income for the fourth quarter 2003 totaled $1.59 compared to $1.85 for the same period a year ago. First Citizens’ results generated an annualized return on average assets of 0.53 percent for the fourth quarter of 2003, compared to 0.64 percent for the same period of 2002. The annualized return on average equity equaled 6.45 percent during the fourth quarter of 2003, compared to 8.05 percent for the same period of 2002. In the fourth quarter, higher noninterest expenses exceeded the favorable impact of improved noninterest income, lower provision for loan losses and a slight improvement in net interest income. Noninterest expense increased $7.8 million or 7.0 percent during the fourth quarter of 2003, when compared to the same period of 2002. Salary expense increased $3.3 million or 6.8 percent during 2003 due to the continued growth and expansion of Atlantic States Bank’s franchise and higher incentive-based compensation. Occupancy expense increased $1.2 million or 12.9 percent, the result of higher depreciation costs and rent expense resulting from new branch facilities.

Noninterest income increased $2.2 million or 3.9 percent during the fourth quarter. Cardholder and merchant services income increased $1.0 million or 7.5 percent due to favorable volume growth, while service-charge income increased $957,000 or 5.0 percent. Growth was also noted in trust income and commission-based income. These increases were partially offset by a $1.5 million reduction in mortgage income.

BancShares reported an increase in net interest income in the fourth quarter of 2003, compared to the prior year’s same quarter. Net interest income increased $246,000 or 0.3 percent in the fourth quarter, compared to the same period of 2002. The improvement in net interest income resulted from loan growth and the collection of interest income on nonaccrual loans. These enhancements to net interest income more than offset the unfavorable impact of lower interest rates on interest-earning assets. The taxable-equivalent net yield on interest-earning assets fell from 3.43 percent in the fourth quarter of 2002 to 3.33 percent for the fourth quarter of 2003. Average interest-earning assets increased $329.3 million or 3.1 percent during the fourth quarter of 2003, compared to the same period of 2002.

The provision for loan losses decreased $2.1 million or 29.0 percent in the fourth quarter of 2003, compared to the same period of 2002 due to lower net charge-offs. Net charge-offs were $3.9 million during the fourth quarter of 2003, compared to $6.2 million during the same period of 2002, a 37.5 percent reduction.

As of Dec. 31, 2003, First Citizens BancShares had total assets of $12.6 billion. BancShares’ subsidiary, First Citizens Bank, has 332 branches in North Carolina, Virginia and West Virginia. Another subsidiary, Atlantic States Bank, has 34 offices in Georgia and Florida. Atlantic States’ western division, IronStone Bank, has 10 offices in Texas, Arizona and California. For more information, visit the First Citizens Web site at firstcitizens.com.

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CONDENSED STATEMENTS OF INCOME
	Three Months Ended December 31		Year Ended December 31
(thousand, except share data; unaudited)	2003	2002	2003	2002
Interest Income	$125,343	$140,508	$510,477	$596,169
Interest expense	32,301	47,712	148,537	214,018
Net interest Income	93,042	92,796	361,940	382,151
Provision for loan losses	5,079	7,156	24,187	26,550
Net interest income after provision for loan losses	87,963	85,640	337,753	355,601
Noninterest Income	58,834	56,618	245,374	221,389
Noninterest expense	120,322	112,496	466,526	433,447
Income before income taxes	26,475	29,762	116,601	143,543
Income taxes	9,901	10,422	41,414	50,787
Net Income	$16,574	$19,340	$75,187	$92,756
Taxable-equivalent net interest income	$93,297	$93,106	$362,991	$383,494
Net income per share	$1.59	$1.85	$7.19	$8.85
Cash dividends per share	0.275	0.25	1.10	1.00
Profitability Information (annualized)
Return on average assets	0.53%	0.64%	0.61%	0.78%
Return on average equity	6.45	8.05	7.54	10.03
Taxable-equivalent net yield on interest-earning assets	3.33	3.43	3.32	3.63

CONDENSED BALANCE SHEETS
(thousand, except share data; unaudited)	December 31 2003	December 31 2002	Change
Cash and due from banks	$790,168	$811,657	- 2.65%
Investment securities	2,469,447	2,539,236	- 2.75%
Loans	8,326,598	7,620,263	9.27%
Reserve for loan losses	(119,357)	(112,533)	6.06%
Other assets	1,093,052	1,373,267	- 20.40%
Total assets	$12,559,908	$12,231,890	2.68%
Deposits	$10,711,332	$10,439,620	2.60%
Other liabilities	819,271	824,979	- 0.69%
Shareholder's equity	1,029,305	967,291	6.41%
Total liabilities and shareholder's equity	$12,559,908	$12,231,890	2.68%
Book value per share	$98.63	$92.36	6.79%
Tangible book value per share	87.51	81.73	7.07%

SELECTED AVERAGE BALANCES
	Three Months Ended December 31		Year Ended December 31
(thousand, except shares outstanding; unaudited)	2003	2002	2003	2002
Total assets	$12,448,911	$12,076,262	$12,245,840	$11,843,239
Investment securities	2,602,630	2,544,930	2,585,376	2,610,622
Loans	8,140,751	7,543,548	7,886,948	7,379,607
Interest-earning assets	11,100,897	10,771,571	10,932,853	10,553,574
Deposits	10,611,464	10,251,693	10,433,781	10,007,398
Interest-bearing liabilities	9,178,628	9,234,127	9,163,960	9,129,168
Shareholder's equity	$1,020,181	$953,606	$996,578	$924,877
Shares Outstanding	10,436,345	10,475,377	10,452,523	10,478,843

ASSET QUALITY
(thousand, unaudited)	December 31 2003	December 31 2002	Change
Nonaccrual loans	$18,190	$15,521	17.20%
Other real estate	5,949	7,330	- 18.84%
Total nonperforming assets	$24,139	$22,851	5.64%
Accuring loans 90 days or more past due	$11,492	$9,566	20.13%
Nonperforming assets to gross loans plus foreclosed real estate	0.29%	0.30%
Reserve for loan losses to gross loans	1.43	1.48
Net charge-offs to average total loans(annualized)	0.23	0.29

CAPITAL INFORMATION
(dollars in thousands, unaudited)	December 31 2003	December 31 2002	Change
Tier 1 capital	$1,152,309	$1,096,537	5.09%
Total capital	1,273,657	1,204,142	5.77%
Risk-weighted assets	8,951,402	8,123,321	10.19%
Tier 1 capital ratio	12.87%	13.50%
Total capital ratio	14.23	14.82
Leverage capital ratio	9.34	9.17
First Citizens BancShares, Inc. and Subsidiaries

For more information, contact:
Barbara Thompson
(919) 716-2716
First Citizens Bank