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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 or 15(D) OF THE SECURITIES
EXCHANGE 
             ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,
2001

[  ]Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 0-11709

First Citizens
Bancshares, Inc.(Exact name of registrant as specified in its charter)

|Tennessee                       | 62-1180360                       
|------------------------------- | ---------------------------------
|(State or other jurisdiction of | (IRS Employer Identification No.)
|incorporation or organization)  |                                  

P.O. Box 370, First
Citizens Place
Dyersburg, Tennessee 38025-0370

(731) 285-4410
(Registrant's telephone number, including area code)________________________

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:Common Stock
(Title of class)________________________

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 12 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 90 days.  Yes [x]
No [  ].

________________________

The aggregate market value of
voting stock held by nonaffiliates of the registrant at December 31, 2001 was
$84,530,175.

Of the registrant's only class of
common stock (no par value) there were 3,675,225 shares outstanding as of
December 31, 2001 (net of Treasury Stock).

________________________

DOCUMENTS
INCORPORATED BY
REFERENCE:

Portions of the Proxy
Statement dated March 15, 2002 (Part III) filed by electronic submission

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PART I

ITEM 1 - BUSINESS

GENERAL

First Citizens Bancshares, Inc. ("Bancshares") was organized December, 1982 as a Tennessee Corporation and commenced operations in September, 1983, with the acquisition of all Capital Stock of First Citizens National Bank of Dyersburg ("First Citizens"). At a meeting of the Board of Directors of First Citizens Bancshares, Inc., on April 19, 2000, a resolution was approved which authorized the filing of a declaration with the Federal Reserve Bank which would result in a change in status from Bank Holding Company to Financial Holding Company.  In accordance with provisions of this resolution, an application for Financial Holding Company status was submitted to the Federal Reserve Bank of St. Louis and subsequently approved on June 8, 2000.

As a financial holding company, Bancshares may engage in activities that are financial in nature or incidental to a financial activity.  Permissible activities for a financial holding company are contained in Regulation Y of Federal Reserve Regulations.  Bancshares may continue to claim the benefits of financial holding status so long as each depository institution owned by the company remains well capitalized and well managed.  In addition, Bancshares may not commence new activities under sections 4(k) or 4(n) of the Bank Holding Company Act or acquire control of a company engaged in activities under those sections if any of Bancshares insured depository institutions receive a rating of less than "satisfactory" under any examination conducted to determine compliance with the Community Reinvestment Act.

First Citizens was chartered as a national bank in 1900 and presently operates a general retail banking business in Dyersburg and Newbern (Dyer County), Ripley (Lauderdale County), and Troy and Union City (Obion County), Tennessee, providing customary banking services.  First Citizens operates under the supervision of the Comptroller of the Currency, is insured up to applicable limits by the Federal Deposit Insurance Corporation and is a member of the Federal Reserve System.  First Citizens operates under the day-to-day management of its own officers and directors; and formulates its own policies with respect to lending practices, interest rates, service charges and other banking matters.

Bancshares' primary source of income is dividends received from First Citizens. Dividend payments are determined in relation to First Citizens' earnings, deposit growth and capital position in compliance with regulatory guidelines. Management anticipates that future increases in the capital of First Citizens will be accomplished through earnings retention or capital injection.

The following table sets forth a comparative analysis of Assets, Deposits, Net Loans, and Equity Capital of Bancshares as of December 31, for the years indicated:

|                     | December 31,  
|-------------------- | --------------
|                     | (in thousands)
|                     | 2001          
|Total Assets         | $  537,991    
|Total Deposits       | 403,508       
|Total Net Loans      | 365,011       
|Total Equity Capital | 49,809        

Individual bank performance is compared to industry standards through utilization of the Uniform Bank Performance Report (UBPR), published quarterly by the Federal Financial Institution's Examination Council.

This report provides comparisons of significant operating ratios of First Citizens Bancshares with peer group banks.  Presented in the following chart are comparisons of First Citizens with peer group banks for the periods indicated:

|                                                                                                                               | As of December 31,
|------------------------------------------------------------------------------------------------------------------------------ | ------------------
|                                                                                                                               | 2001              
|                                                                                                                               | Bancshares        
|Average Assets/Net Interest Income                                                                                             | 3.84%             
|Average Assets/Net Operating Income                                                                                            | 1.06              
|Net loan losses/Average total loans                                                                                            | 0.30              
|Primary Capital/Average Assets                                                                                                 | 9.39              
|Cash Dividends/Net Income**                                                                                                    | 67.62             
|                                                                                                                               |                   
|** Performance as of 12/31/01 is
      compared to peer group ratios as of 09/30/01 (Most recent Federal Reserve
      Report)

EXPANSION

On November 12, 1999 the Gramm-Leach-Bliley Act was signed into law.  The act contains seven titles, each of which focuses on a different aspect of the financial services industry. This new law will significantly change the way we do business by opening up new business opportunities to the banking industry.

Based on authority granted under this act, First Citizens Bancshares, Inc., formerly a Bank Holding Company, converted to a Financial Holding Company.  As a financial holding company, Bancshares may engage in activities that are financial in nature or incidental to a financial activity.

First Citizens through its strategic planning process has stated its
intention to seek profitable opportunities that would utilize excess capital and maximize income within the West Tennessee Area.  First
Citizens' objective in acquiring other banking institutions would be for asset growth and diversification into other market areas.  Acquisitions would afford the bank increased economies of scale within the data processing function and better utilization of human resources.  Any acquisition approved by Bancshares, would be deemed to be in the best interest of Bancshares and its shareholders.

In December 2001 an Intent to Purchase Agreement was signed with shareholders of Metropolitan Bancshares whereby Bancshares would purchase the assets and assume liabilities of Munford Union Bank, pending regulatory approval.  When consumated, this action will add approximately $115,000,000 in assets housed in five locations in Tipton and Shelby Counties in Southeast Tennessee to Bancshares' balance sheet.  In addition, this will expand our market into one of the fastest growing areas in our state.  The transaction is expected to close by April 30, 2002.

SUPERVISION AND REGULATION

Bancshares is a one-bank financial holding company under the Bank Holding Company Act of 1956, as amended, and is subject to supervision and examination by the Board of Governors of the Federal Reserve.

As a financial holding company, Bancshares is required to file with the Federal Reserve annual reports and other information regarding the business obligations of itself and its subsidiaries.  Board approval must be obtained before Bancshares may:

> Acquire ownership or control of any voting securities of a bank or Bank Holding Company where the acquisition results in the BHC owning or controlling more than 5 percent of a class of voting securities of that bank or BHC;
>     Acquire substantially all assets of a bank or BHC or merge with another BHC.

Federal Reserve approval is not required for a bank subsidiary of a BHC to merge with or acquire substantially all assets of another bank if prior approval of a federal supervisory agency, such as the Comptroller of the Currency is required under the Bank Merger Act.  Relocation of a subsidiary bank of a BHC from one state to another requires prior approval of the Federal Reserve and is subject to the prohibitions of the Douglas Amendment.

The Bank Holding Company Act provides that the Federal Reserve shall not approve any acquisition, merger or consolidation which would result in a monopoly or which would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the United States.  Further, the Federal Reserve may not approve any other proposed acquisition, merger, or consolidation, the effect of which might be to substantially lessen competition or tend to create a monopoly in any section of the country, or which in any manner would be in restraint of trade, unless the anti-competitive effect of the proposed transaction is clearly outweighed in favor of public interest by the probable effect of the transaction in meeting convenience and needs of the community to be served. An amendment effective February 4, 1993 further provides that an application may be denied if the applicant has failed to provide the Federal Reserve with adequate assurances that it will make available such information on its operations and activities, and the operations and activities of any affiliate, deemed appropriate to determine and enforce compliance with the Bank Holding Company Act and any other applicable federal banking statutes and regulations.  In addition, consideration is given to the competence, experience and integrity of the officers, directors and principal shareholders of the applicant and any subsidiaries as well as the banks and bank holding companies concerned.  The Federal Reserve also considers the record of the applicant and its affiliates in fulfilling commitments to conditions imposed by the Federal Reserve in connection with prior applications.

A bank holding company is prohibited with limited exceptions from engaging directly or indirectly through its subsidiaries in activities unrelated to banking or managing or controlling banks.  One exception to this limitation permits ownership of a company engaged solely in furnishing services to banks; another permits ownership of shares of the company, all of the activities of which the Federal Reserve has determined after due notice and opportunity for hearing, to be so closely related to banking or managing or controlling banks, as to be a proper incident thereto.  Moreover, under the 1970 amendments to the Act and to the Board's regulations, a financial holding company and its subsidiaries are prohibited from engaging in certain "tie-in" arrangements in connection with any extension of credit or provision of any property or service. Subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Federal Reserve Act on any extension of credit to the financial holding company or to any of its other subsidiaries, or investments in the stock or other securities thereof, and on the taking of such stock or securities as collateral for loans to any borrower.

Financial holding companies are required to file an annual report of their operations with the Federal Reserve, and they and their subsidiaries are subject to examination by the Federal Reserve.

CAPITAL

Bancshares is subject to capital adequacy requirements imposed by the Federal Reserve Bank.  In addition, First Citizens (the principal subsidiary of the corporation) is restricted by the Office of the Comptroller of the
Currency (Comptroller) from paying dividends in any years which exceed the net earnings of the current year plus retained profits of the preceding two years. It is the policy of First Citizens to comply with regulatory requirements for the payment of dividends.  The Federal Reserve adopted a risk-based capital measure for use in evaluating the capital adequacy of bank holding companies effective January 1, 1991. The risk-based capital measure focuses primarily on broad categories of credit risk and incorporates elements of transfer, interest
rate and market rate risk. The calculation of risk-based capital is accomplished by dividing qualifying capital by weighted risk assets. The minimum risk-based capital ratio is 8%, at least one-half or 4.00% must consist of core capital (Tier 1), and the remaining 4% may be in the form of core (Tier 1) or supplemental capital (Tier 2).  Tier 1 capital/core capital consists of common stockholders equity, qualified perpetual stock and minority interests in consolidated subsidiaries. Tier 2 capital/supplementary capital consists of the allowance for loan and lease loses, perpetual preferred stock, term subordinated debt, and other debt and stock instruments.  Bancshares has historically maintained capital in excess of minimum levels established by the Federal Reserve. A risked based capital analysis is performed on a quarterly basis to test for compliance with Federal Reserve and bank policy guidelines before declaring a dividend or increasing a dividend. First Citizens' policy states that before declaring a dividend the following ratios will be achieved: (1) Risk Based Capital Tier 1 will be 8.25% or above; Return on year-to-date average equity 9.00%; Asset growth and projected one year future asset growth less than 20.00%; and non performing assets to capital less than 30%.  Non performing assets include 90 day past due and non accrual loans.

ITEM 1A.     EXECUTIVE OFFICERS OF THE REGISTRANT

The following information relates to the principal executive officers of Bancshares and its principal subsidiary, First Citizens National Bank as
of December 31, 2001:

Name
      Age
      Position and OfficeStallings Lipford
      71
      Chairman of the Board of Bancshares and First Citizens.  Mr. Lipford joined First
        Citizens in 1950.  He became a member of the Board of Directors in 1960 and President in
        1970.  He was made Vice Chairman of the Board in 1982.  He served as Vice Chairman of the
        Board of Bancshares from September, 1982 to February, 1984.  He served as President & CEO
        of Bancshares from 1983 to 1992.Katie Winchester
      61
      Vice Chairman of the Board since Fall 2000. President and CEO of Bancshares and First Citizens; employed by First Citizens in 1961; served as Executive Vice President and Secretary of the Board from 1986 to 1992.  She was appointed CEO of Bancshares and First Citizens in 1996; and President of Bancshares and First Citizens in 1992.  Ms. Winchester was elected to the Board of both First Citizens and Bancshares in 1990.Ralph Henson
      60
      Vice President of Bancshares; Executive Vice President of Loan Administration of First Citizens. Employed by First Citizens in 1964. Mr. Henson served First Citizens as Senior Vice President and Senior Lending Officer until his appointment as Executive Vice President of Loan Administration in February, 1993.  Appointed to Board of Directors in 1997.Jeffrey Agee
      41
      Vice President and Chief Financial Officer of Bancshares.  Appointed Executive Vice President and CFO of First Citizens National Bank in August 1999. Mr. Agee served as Senior Vice President and CFO of First Citizens prior to this appointment. Employed by First Citizens in 1982.  Served First Citizens previous to April, 1994 as Vice President and Accounting Officer. Appointed Senior Vice President and Chief Financial Officer of First Citizens, April 17, 1996.Barry Ladd
      61
      Appointed Executive Vice President and Chief Administrative Officer of First Citizens and Bancshares in 1996.  Senior Vice President and Senior Lending Officer of First Citizens from April 20, 1994 to January 17, 1996.  Employed by First Citizens in 1972.  Mr. Ladd served First Citizens as Vice President and Lending Officer previous to his appointment as Senior Vice President. Appointed to Board of Directors in 1996.Judy Long
      47
      Vice President and Secretary to the Board of First Citizens Bancshares.  Appointed Executive Vice President and Chief Operations Officer and Secretary of the board of both First Citizens National Bank and Bancshares in August 1999.  Ms. Long served as Senior Vice President and Chief Operations Officer and Secretary to First Citizens prior to this appointment.  She served as Senior Vice President and Administrative Officer previous to November 1997; Vice President and Loan Operations Manager (1992-1996). Employed by First Citizens on July 19, 1974.


BANKING BUSINESS

First Citizens operates a general retail banking business in Dyer County, Tennessee.  The bank expanded its banking operations into Lauderdale County in 1995 with the purchase of $8 million in assets and Obion County in 1997 and 1998, purchasing approximately $104 million in assets. All persons who live in either community or who work in or have a business or economic interest in either county are considered as forming a part of the area serviced by First Citizens. First Citizens provides customary banking services, such as checking and savings accounts, funds transfers, various types of time deposits, and safe deposit facilities.  It also finances commercial transactions and makes and services both secured and unsecured loans to individuals, firms, and corporations.  Commercial lending operations include various types of credit services for its customers.

Agricultural services are provided that include operating loans as well as financing for the purchase of equipment and farm land.  The consumer lending department makes direct loans to individuals for personal, automobile, real estate, home improvement, business and collateral needs. Mortgage lending makes available long term fixed and variable rate loans to finance the purchase of residential real estate.  These loans are sold in the secondary market without retaining servicing rights.  Credit cards and open-ended credit lines are available to both commercial customers and consumers.

Corporate Offices for First Citizens Bancshares and First Citizens National Bank are located in Dyersburg/Dyer County, Tennessee.  Dyersburg/Dyer County is located in northwest Tennessee and sits on the banks of the Mississippi River.  It is 78 miles northeast of Memphis, Tennessee, 165 miles west of Nashville and 230 miles south of St. Louis, Missouri.  Dyer County is equidistant between Chicago and New Orleans with direct rail, Amtrak, highway and interstate service to major industrial and consumer markets. Dyersburg/Dyer County is an anchor in the region that blends education, transportation, industry agribusiness and retail trade to serve the tri-state and service the encompassing Northwest Tennessee, Northwest Arkansas, and the Missouri Boot
heel area. Dyer County is a mix of agriculture and industry.  Sixty-eight percent of the land in Dyer County is in agricultural production and farming is a major industry in the county.  Dyer County is Tennessee's number one producer of soybeans, grain sorghum, commercial vegetables and rice. Other important crops are wheat, cotton, and corn. There are 61 manufacturers and processors distributed throughout the county employing approximately 7,500 workers. The local economy slowed significantly in recent months following a trend which began nationally in mid - 2000.  In December 2001, Dyer County unemployment rate was 8.8% compared to the State of Tennessee unemployment rate of 4.5%. The labor force in Dyer County decreased 7.66% from 19,450 in January 1995 to 17,960 in December 2000 primarily due to closings and layoffs in local industries and businesses.  A textile manufacturing plant closed in mid-2001, eliminating 900+ jobs, and severely impacting the local economy.

First Citizens National Bank expanded its base of operations into Obion County
in 1998. Obion County is located approximately 27 miles north of Dyersburg and is adjacent to Dyer County.  Economic conditions in Obion County appear to be solid and growing.  The unemployment rate as of December 31, 2001 was 3.5% down from 4.1% at December 31, 2000. The County is a mix of industry, service and retail business.  Goodyear Manufacturing, a builder of tires, is the largest employer in the county, employing approximately 3,400 workers at year end 2001. Total Assets of First Citizens National Bank
- Obion County offices in Troy and Union City are approximately $114 million consisting primarily of consumer and retail business loans.  Total assets of the Lauderdale County office in Ripley increased to approximately $17,234 million consisting primarily of commercial, business and agriculture loans.  Unemployment in Lauderdale County as of December 31, 2000 was 9.0% compared to 4.5% for the state.

First Citizens Financial Plus, Inc., a Bank Service Corporation wholly owned by First Citizens is a licensed Brokerage Service.  This allows the bank to compete on a limited basis with numerous non-bank entities who pose a continuing threat to our customer base, and are free to operate outside regulatory control. A second office of First Citizens Financial Plus, Inc. was opened in January 2000 at our Union City location.

First Citizens was granted trust powers in 1925 and has maintained an active Trust Department since that time.  Assets as of December 31, 2001 were in excess of $135,360,000.  Services offered by the Investment Management and Trust Services Division include but are not limited to estate settlement, trustee of living trusts, testamentary trustee, court appointed conservator and guardian, agent for investment accounts, and trustee of pension and profit sharing trusts.

Delta Finance, a finance company wholly owned by First Citizens National Bank offers financial service to the retail market.  Services offered by Delta Finance, consumer finance affiliate, consist primarily of consumer and residential real estate loans. The three offices of Delta Finance are located in Dyersburg, Milan and Union City, TN.  The Union City location was purchased in November 2000.  Delta Finance was placed on the market "For Sale" last quarter of 2001.  Return on this investment is not consistent with strategic goals of First Citizens, prompting the decision to divest ourselves of this business line.

On February 9, 1998, White and Associates/First Citizens Insurance, LLC was chartered by the State of Tennessee.  White and Associates/First Citizens is a general insurance agency offering a full line of insurance products including casualty, Life and Health, and crop insurance.  First Citizens holds a 50% ownership position, with Mr. White being the managing partner.

A second location of White and Associates/First Citizens Insurance was opened on July 1, 1998 with the purchase of Durham Insurance and is now operating out of the Union City Main Office of First Citizens National Bank.  On December 28, 1998 a credit insurance company was formed as First Citizens/White and Associates Insurance Company. In January 1999, First Citizens acquired First Volunteer Bank of Union City and the primary
office for Obion County was relocated to the Union City Branch.  Halls Insurance Agency, a primary provider of Crop Insurance in the state of Tennessee, was acquired by White & Associates/First Citizens Insurance LLC and a full time agent placed in the Agricultural Services Department at the Main office. In addition, a Title Insurance Company established in 1999, is two-thirds owned by White and Associates/First Citizens, LLC.

On July 19, 2000, the Board approved the organization of Nevada I, which is a corporation organized and existing under the laws of the state of Nevada.  The sole activities of Nevada I are the ownership of stock in Nevada II and the ownership of certain loans pursuant to a Participation Agreement.  Nevada I will neither own nor lease any tangible property. Nevada I will have an employee located in the state of Nevada and officers and directors located in the state of Tennessee. Permission was also granted to organize Nevada II, which is also a corporation organized and existing under the laws of the state of Nevada.  Nevada II board of directors consists of three persons, two Tennessee residents and one Nevada resident.  All board meetings will held in Las Vegas, Nevada.  The principal activity of Nevada II is to acquire and sell investment securities as well as collect the income from the portfolio.  The sole purpose will be to transfer the bank's investment activity to the Nevada II Corporation. In conjunction with the Nevada Corporation and transfer of the investment portfolio, FTN Financial assumed management of the portfolio, with First
Citizens retaining the option to approve all sales and purchases.

The business of providing financial services is highly competitive. The competition involves not only other banks but non-financial enterprises as well. In addition to competing with other commercial banks in the service area, First Citizens competes with savings and loan associations, insurance companies, savings banks, small loan companies, finance companies, mortgage companies, real estate investment trusts, certain governmental agencies, credit card organizations, and other enterprises.

The following tabular analysis sets forth the competitive position of First Citizens when compared with other financial institutions in the service area for the period ending June 30, 2001.

Dyer, Lauderdale & Obion
        Counties Market(Bank's Only)(in
        thousands)Bank Name
      Total   
        Deposits  06/30/01
      % of   
        Market   
        Share   06/30/01First Citizens National Bank
      $   397,423
      31.12
      %First State Bank
      197,212
      15.44Union Planters Bank, National Association
      106,117
      8.31Bank of Ripley
      113,500
      8.89Commercial Bank & Trust Co.
      90,587
      7.09Security Bank
      80,398
      6.29First Tennessee Bank, National
        Association
      69,653
      5.45Reelfoot Bank
      67,800
      5.31Bank of Halls
      37,886
      2.97Lauderdale County Bank
      28,414
      2.22Gates Banking & Trust Co.
      25,751
      2.02Bank Tennessee
      24,872
      1.95BancorpSouth Bank
      16,195
      1.27Farmers Bank, Woodland Mills, TN
      12,120
      0.95City State Bank
      9,258
      0.72Total
      $  1,277,186
      100.00
      %


*Does not include deposits of $17,827,000 categorized as Overnight and fixed term Repurchase Agreements.

At December 31, 2001 Bancshares and its subsidiary, First Citizens, employed a total of 204 full time equivalent employees. Having been a part of the local community in excess of 100 years, First Citizens has been privileged to enjoy a major share of the financial services market. Dyersburg and Dyer County are growing and with this growth come demands for more sophisticated financial products and services. Strategic planning has afforded the Company both the physical resources and data processing technology necessary to meet financial needs generated by this growth.

USURY, RECENT LEGISLATION AND ECONOMIC ENVIRONMENT

Tennessee usury laws limit the rate of interest that may be charged by banks. Certain Federal laws provide for preemption of state usury laws. Legislation
enacted in 1983 amends Tennessee usury laws to permit interest at an annual rate of interest four (4) percentage points above the average prime loan rate for the most recent week for which such an average rate has been published by the Board of Governors of the Federal Reserve, or twenty-four percent (24%), which ever is less (TCA 47-14-102(3)). The "Most Favored Lender Doctrine" permits national banks to charge the highest rate permitted by any state lender.

Specific usury laws may apply to certain categories of loans, such as the limitation placed on interest rates on single pay loans of $1,000.00 or less for one year or less.  Rates charged on installment loans, including credit cards, as well as other types of loans may be governed by the Industrial Loan and Thrift Companies Act.

IMPACT OF GRAMM LEACH-BLILEY ACT

On September 29, 1994, President Clinton signed into law the Riegel-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Act"). The Act provides for nationwide interstate banking and branching with certain limitations. The Act permits bank holding companies to acquire banks without regard to state boundaries after September 29, 1995.  The Federal Reserve may approve an interstate acquisition only if, as a result of the acquisition, the bank holding company would control less than 10% of the total amount of insured deposits in the United States or 30% of deposits in the home state of the bank being acquired. The home state can waive the 30% limit as long as there is no discrimination against out-of-state institutions.

Pursuant to the Act, interstate branching took effect on June 1, 1997, except under certain circumstances.  Once a bank has established branches in a host state (a state other than its headquarters state) through an interstate merger transaction, the bank may establish and acquire additional branches at any location in the host state where any bank involved in the interstate merger transaction could have established or acquired branches under applicable federal or state law.

The Act further provides that individual states might opt out of interstate branching, prior to May 31, 1997.  A bank in that state may merge with a bank in another state provided that neither of the states have opted out.

The Federal Reserve in September, 1996 gave bank holding companies the right to exclude certain securities earnings from the 10% cap on underwriting revenue through "Section 20 Units".  It later removed three firewalls, one of which prevented the same bank employee from selling underwriting services, loans and transactions accounts.  The Federal Reserve on December 20 more than doubled, to 25% the amount of revenue section 20 units may earn underwriting and dealing in commercial securities.  The Office of the Comptroller of the Currency in adopting its controversial operating-subsidiary rule in November 1996, established a procedure that allows national banks to create subsidiaries to underwrite securities, sell
insurance, or conduct other activities that the banks may engage in directly. Change in the law for securities underwriting will have no impact on First Citizens since the bank does not engage in this practice.  Legislation being considered would possibly limit this action to operating Subsidiaries of the Holding Company only.

The Comptrollers' operating-subsidiary rule also streamlined national banks' applications for new branches.  It sets a strict 45-day deadline for Comptroller action on all applications, with a 10 day extension possible when serious CRA issues are raised.  The Comptroller provisions closely parallel changes to Regulation Y issued by the Federal Reserve in August, 1996.  Those changes give the Federal Reserve 15 days to process most merger applications. It also expands data processing powers, eliminates tying restriction on nonbanks, and allows bank-run trusts to buy mutual funds advised by the bank.

The Gramm-Leach-Bliley Act, referred to as "Financial Modernization" was signed into law November 12, 1999.  The Act is the most significant piece of legislation to be enacted in the last 50 years and is expected to dramatically change the landscape of the financial services industry. In essence, the Act is a conglomeration of numerous provisions that impact a broad range of issues within the banking industry.  Financial Modernization will pave the way for a new era in banking.

The Act contains seven titles, each of which focuses on a different aspect of the financial services industry.  An overview of the Act can be summarized using the following points:



Reasserts the supremacy of state regulation of the business of insurance with specific exceptions.

Prohibits companies outside the financial services industry to purchase (merge/affiliate) with insurers, banks, and/or securities firms.

Allows banks to sell insurance and securities products as long as it discloses to the purchasers that these products are not guaranteed by the Federal Deposit Insurance System.

Prohibits banks from tying the purchase of insurance and securities products as conditions for loan approvals.

Permits affiliated companies to share customers' personal data with each other but gives the customer the right to prohibit the sharing of this data with companies outside the holding company structure.

Allows states to preempt federal laws that offer greater privacy protections than those included in the Financial Services Modernization Act.

Requires states to enact uniform laws and regulations governing the licensure of individuals and entities authorized to sell and solicit the purchases of insurance within and outside a state.

What does this mean for First Citizens?  The primary impact will be increased competition as large-scale independent investment bankers (brokerage firms, insurance companies, mutual funds) are likely to begin offering banking services in offices nationwide.  The good news is, our focus on diversification has placed the Company in a position to compete by offering the same products and services at convenient locations by a staff our customers know and trust.  Through utilization of technology, we offer the same sophisticated services as larger banks with offices nationwide. One example is our Internet Banking Account that has drawn rave reviews from existing and new customers.  Customers of First Citizens Financial Plus have access to on-line trading and White and Associates/First Citizens Insurance has established a web presence that is progressing toward on-line insurance sales.

Overall, opportunities available as a result of the new legislation are a plus for community banks.  Increased competition that is sure to develop from giant financial services organizations simply means we will work harder to earn the business of our customers.  As community bankers, we recognize that bigger does not always mean better, and knowing our customers affords us a tremendous advantage as we strive to identify and serve their financial needs.

First Citizens intends to pursue challenges and opportunities presented by "Financial Modernization".  We have made the choice to compete and will do so in an aggressive manner.  We intend to maximize our potential for success as we focus on the following:



Strategic Planning
  - Establishing a clear direction for the future of First Citizens, understanding what must be done to accomplish established goals and recognizing signs that might indicate a need to rethink the strategy are key components of the Plan.  The management team, acting under guidance of a diverse and committed Board of Directors is positioned to execute a well thought out Strategic Plan.

Technology Utilization
  - Automated customer information systems, electronic banking and remote distribution of services are as available to First Citizens as to the largest bank in America. We are committed to investing resources in a manner that will allow us to remain competitive as the information age continues to grow and mature.

Staff Development
  - There is no one element within an organization more
  important to success than the quality of staff.  In spite of automation and the efficiencies of outsourcing, community banks still need people. In
  response, a formalized Staff Development program was introduced in 1999, which will support and enhance the quality of current and future management of First Citizens at all levels.  Recognizing leadership skills, enhancing abilities through training and supporting realistic career goals are primary objectives of this ongoing process.

The likely focus of the immediate future in this industry is the convergence of financial services.  Our emphasis on diversification in recent years has placed First Citizens in the enviable position of being able to effectively compete in this new environment.

CUSTOMER INFORMATION SECURITY AND CUSTOMER FINANCIAL PRIVACY

The Board of Governors of the Federal Reserve System published guidelines for Customer Information Security and Customer Financial Privacy with a mandatory effective date of July 1, 2001.  First Citizens has established policies in adherence to the published guidelines.

The three principal requirements relating to the Privacy of Consumer Financial Information in the GLBA:

- Financial institutions must provide their customers with notices describing their privacy policies and practices, including their policies with respect to the disclosure of nonpublic personal information to their affiliates and to nonaffiliated third parties.  The notices must be provided at the time the customer relationship is established and annually thereafter.

- Subject to specified exceptions, financial institutions may not disclose nonpublic personal information about consumers to any nonaffiliated third party unless consumers are given a reasonable opportunity to direct that such information not be shared (to "opt out").

- Financial institutions generally may not disclose customer account numbers to any nonaffiliated third party for marketing purposes.

The Customer Information Security guidelines implement section 501(b) of the Gramm-Leach-Bliley Act.  The act requires the agencies to establish standards for financial institutions relating to administrative, technical and physical safeguards for customer records and information.

The guidelines require financial institutions to establish an information security program to:

- Identify and assess the risks that may threaten customer information;
- Develop a written plan containing policies and procedures to manage and control these risks;
- Implement and test the plan; and
- Adjust the plan on a continuing basis to account for changes in technology, the sensitivity of customer information, and internal or external threats to information security

Each institution may implement a security program appropriate to its size and complexity and the nature and scope of its operations.  First Citizens National Bank has structured and implemented a financial security program that complies with all principal requirements of the act.

There are no known trends, events or uncertainties that are likely to have a material effect on First Citizens liquidity, capital resources or results of operation. There currently exists no recommendation by regulatory authorities which if implemented, would have such an effect. There are no matters which have not been disclosed. There are numerous banks located within markets served by First Citizens who compete for deposit dollars and earning assets, two of whom are branches of large regional competitors.  First Tennessee Bank and Union Planters National Bank are two of the largest financial
institutions in the state.  Interstate banking as permitted by recent federal legislation as discussed herein could possibly bring about the location of large out of state banks to the area. If so, First Citizens would continue to operate as it has in the past, focusing on the wants and needs of existing and potential customers and maximizing the use of technology. The quality of service and individual attention afforded by an independent community bank cannot be matched by large regional competitors, managed by a corporate team unfamiliar to the area. First Citizens is a forward thinking bank offering products and services required to maintain satisfactory customer relationships as we move into the twenty-first century.

Monetary policies of regulatory authorities, including the Federal Reserve have a significant effect on operating results of bank holding companies and their subsidiary banks.  The Federal Reserve regulates the national supply of bank credit by open market operations in United States Government securities, changes in the discount rate on bank borrowings, and changes in reserve requirements against bank deposits. A tool once extensively used by the Federal Reserve to control growth and distribution of bank loans, investments and deposits has been eliminated through deregulation.  Competition, not regulation, dictates rates which must be paid and/or charged in order to attract and retain customers.

Federal Reserve monetary policies have materially affected the operating results of commercial banks in the past and are expected to do so in the future.  The nature of future monetary policies and the effect of such policies on the business and earnings of the company and its subsidiaries cannot be accurately predicted.

ITEM 2.     PROPERTIES

First Citizens owns and occupies a six-story building in Dyersburg, Tennessee containing approximately 50,453 square feet of office space, bearing the municipal address of First Citizens Place (formerly 200 West Court).  An expansion program completed during 1988 doubled the available floor space of the existing facility.  The space was utilized to combine all lending and loan related functions.  First Citizens owns the Banking Annex containing total square footage of 12,989 which provides operating space for banking departments i.e. agricultural services, training and public relations, as well as the bank's Brokerage subsidiaries.  The municipal address of the bank occupied portion of the Annex is 215-219 Masonic Street.

DOWNTOWN DRIVE-IN:

The land and building occupied by the Downtown Drive-in Branch located at 113 South Church Street, Dyersburg, Tennessee is owned by First Citizens National Bank.  The building, newly constructed in 2001 occupies approximately 898 square feet and will be a remote motor bank with six drive-thru lanes and a
drive-up ATM lane.

GREEN VILLAGE:

The Green Village Office is located at 620 U.S. 51 Bypass adjacent to the Green Village Shopping Center.  Construction of the new office was completed in June 2000.  The 6400 square foot facility is designed to generate and service a much larger customer base than currently exists. The addition of a commercial lender to staff, a small business center designed to focus on the needs of local business and a full service postal facility lay the groundwork for growth and development at this location.  This facility is equipped with seven drive up teller lanes, one of which is an ATM.

NEWBERN:

The Newbern Branch, also owned by First Citizens, is located on North Monroe Street, Newbern, Tennessee.  The building contains approximately 4,284 square feet and occupies land which measures approximately 1.5 acres. A separate facility located in Newbern on the corner of Highway 51 and RoEllen Road houses an ATM.  Both land and building are owned by the Bank.

INDUSTRIAL PARK:

The Industrial Park Branch located at 2211 St. John Avenue is a full service banking facility that offers drive-thru Teller and ATM services. The building
owned by First Citizens National Bank contains approximately 2,773 square feet
and is located on 1.12 acres of land. The Industrial Park Branch, became
operational In November, 1994.

RIPLEY:

The Ripley, Lauderdale County facility contains approximately
3,500 square feet and is located on 1.151 acres of land located at 316 Cleveland
Street in Ripley, Tennessee. The facililty, newly constructed in 1999 offers
full services banking with four drive-up lanes and a twenty four hour access
drive-up ATM. Other services offered at the Ripley office are mortgage loans,
Brokerages and Insurance.

TROY:

The Bank of Troy was purchased by First Citizens National Bank
in early 1998. The Troy Branch is located on Harper Street just west of Highway
51 in Troy, Tennessee. The building is two story brick and siding. The site
consists of three lots with maximum dimensions on each side being 272 feet and
260 feet. The first floor in the main building contains 5,896 square feet and
houses a full service branch facility. Most of the building was constructed in
1970 with additions and renovations being made since that time. First Citizens
has two ATMs located in Troy, one at 510 East Harper Street and the other in the
Little General Store.

UNION CITY:

First Volunteer Bank in Union City was
purchased by First Citizens early in January 1999. The Union City branch
operates two full service facilities, a motor branch and three ATM's in Obion
County. The main office is located at 100 Washington Avenue in Union City. The
brick building consists of 52,500 square feet on three floors and is a
combination of two buildings. The bank occupies 10,000 square feet of the ground
floor. An additional 3,750 square feet are used for storage space. The other
3,750 square feet of the ground floor are leased to Snappy Tomato Pizza Company.
A motor branch is located at First and Harrison Streets across from the main
office. The East branch facility and ATM are located at 1509 East Reelfoot
Avenue in Union City.

As a result of the Union City acquisition,
First Citizens acquired a 5,123 square foot building having a street address of
500 South First Street, currently leased by Radio Shack. This building will be
considered in terms of future expansion of the Union City franchise, or will be
sold if no future utilization can be identified.

There are no liens or encumbrances against any properties
owned by First Citizens.

ITEM 3.     LEGAL PROCEEDINGS

First Citizens is involved in routine legal
issues. However, the outcome of these issues are not expected to have a material
adverse effect to the bank.

ITEM 4.     SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the year ending
December 31, 2001, there were no meetings, annual or special, of the
shareholders of Bancshares. No matters were submitted to a vote of the
shareholders nor were proxies solicited by management or any other person.

---

PART II

ITEM 5.     MARKET FOR REGISTRANT'S
COMMON STOCK AND RELATED STOCKHOLDER MATTERS

As of December 31, 2001 there were 981
shareholders of Bancshares' stock. Bancshares common stock is not actively
traded on any market. Per share prices reflected in the following table are
based on records of actual sales during stated time periods. These records may
not include all sales during these time periods if sales were not reported to
First Citizens for transfer.

Quarter Ended
    
    High
    LowMarch 31, 2001
    $   20.00
    $  19.00June 30, 2001
    $   23.00
    $  19.00September 30, 2001
    $   23.00
    $  23.00December 31, 2001
    $   25.00
    $  23.00March 31, 2000
    $   24.00
    $  24.00June 30, 2000
    $   24.00
    $  19.00September 30, 2000
    $   19.00
    $  19.00December 31, 2000
    $   19.00
    $  19.00


Dividend payouts per share restated to reflect a 4:1 stock
split in June 1998 were 1.00 dollar in 2000, .90 cents in 1999 and .75 cents in
1998.

Dividends - 2001DividendPer Share
    QuarterDeclared.2500
    1st.2500
    2nd.2500
    3rd.2500
    4thTotal $1.0000


*Special dividend paid in fourth quarter 2000 and 1999.

Future dividends will depend on Bancshares'
earnings and financial condition and other factors which the Board of Directors
of Bancshares considers relevant.

ITEM 6.     SELECTED FINANCIAL DATA

The following table presents information for Bancshares
effective December 31 for the years indicated.

2001



2000



1999



1998



1997(Dollars in
      thousands, except per share data)Net Interest & Fee Income
    $    19,917



    $    18,594



    $    19,305



    $    17,964



    $    16,021Gross Interest Income
    39,189



    38,137



    36,085



    35,252



    30,698Income From Continuing Operations
    5,760



    4,612



    5,799



    4,474



    4,730Long Term Obligations (1)
    63,075



    44,237



    11,264



    25,486



    12,146Income Per Share from Continuing Operation
      (2)
    $  1.56



    $  1.24



    $  1.58



    $  1.25



    $  1.38Net Income per Common Share (2)
    $  1.56



    $  1.24



    $  1.58



    $  1.25



    $  1.38Cash Dividends Declared per Common Share (2)
    $  1.00



    $  1.00



    $  0.90



    $  0.75



    $  0.50Total Assets at Year End
    $  537,991



    $  500,954



    $  472,670



    $  472,153



    $  384,183Allowance for Loan Losses as a % Loans
    1.08%



    1.10%



    1.14%



    1.25%



    1.21%Allowance for Loan Losses as a % of
      Non-Performing
            Loans
    141.97%



    125.01%



    445.26%



    509.62%



    461.76%Loans 90 Days Past Due as a % of Loans
    0.33%



    0.47%



    0.10%



    0.14%



    0.00%


(1)    Long Term Obligations consist of FHLB
Borrowings, an ESOP obligation, and Finance Company Debts.

(2)    Restated to reflect 4 for 1 Stock Split
on June 15, 1998.

---

ITEM 7.     MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

First Citizens Bancshares Inc. is a one-bank holding company
headquartered in Dyersburg, Tennessee with full service banking locations Dyer,
Lauderdale and Obion Counties. The primary asset of Bancshares is First Citizens
National Bank, but also includes First Citizens Financial Plus, Inc, a full
service brokerage subsidiary, 50% ownership in White and Associates/First
Citizens Insurance, a full service insurance agency, and Delta Finance, a
consumer finance affiliate. First Citizens National Bank also offers a full
range of Trust and Mortgage Loan services.

The following discussion reviews important factors affecting
the financial condition and results of operations of the Corporation for periods
indicated. The review should be read in conjunction with the consolidated
financial statements and related notes. The discussion also contains
forward-looking statements that must also be read in conjunction with the
Corporation's Consolidated Financial Statements and Footnotes. Any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements.

A review of the financials contained within this report
reveals renewed growth in deposits, loans and assets of the company. Earnings
are much improved over the prior year, increasing 27%, supported by an upward
trend in net interest margins that began in second quarter and is expected to
continue into the current year.

Balance Sheet Summary: Assets grew
7.9%, up in excess of $39,000,000 when compared to year-end 2000. This increase
represents good solid internal growth with no acquisitions being accomplished in
2001. For the first time in recent history, growth in deposits exceeded that of
loans, with increases of $31,659,000 (8.5%) in deposits and $27,815,000 (8.25%)
in loans. This can be attributed in part to a flight to safety by customers
concerned with volatility of financial markets, opting instead for security of
principal afforded by FDIC insurance. Capital growth of 7.9% was supported by
improved earnings and an increase in unrealized gains in the Available for Sale
segment of the Investment Portfolio.

Income Statement: Improved net
interest marginsandan increase in other income resulted in a 27%
increase in net income when compared to results of the prior year. This was
accomplished in spite of a 24% increase in the loan loss provision, a reflection
of the slowing economy and growth within the portfolio. Overall loan portfolio
quality remains high, a reflection of strong underwriting standards and diligent
oversight by loan administration. The long term Mortgage division was a major
contributor to the increase in earnings, ending a record year with income up
more than %. Our partnership with White & Associates Insurance produced
$242,000 in after tax earnings during 2001, an increase of 19% when compared to
year 2000 results.

Liquidity/asset/liability management:
The increase in deposit totals and turnover in the investment portfolio
resulting from callable securities significantly improved the liquidity
position, but also lowered returns. We are reinvesting with an enhanced
awareness of the management of callable securities and the impact their
structure can have on net interest margins in a falling rate environment.

Shareholder value: The management
team at First Citizens is driven by shareholder value. Proposals that involve
expansion of markets, investment in new or existing business lines and internal
enhancements of operations are all focused toward long-term improvement in the
shareholder value of the Company. Dividend yields on Bancshares' Common Stock
for years 2001 and 2000 were 45% and 79% above peer group payout ratios. A
five-year stock buy-back program approved by the Board of Directors will reduce
the number of outstanding shares and thereby enhance the value of each remaining
share. During 2001, a total of 41,000 shares were purchased at a cost of
$939,000. These shares are held as Treasury Stock and are not available for
resale. The management team is committed to the future of First Citizens
National Bank as an independent community bank. We realize that the only way
this can be accomplished is by providing financial returns sufficient to
maintain a high level of shareholder value.

Our future: By the time this
report reaches investors, a new location in Martin, Tennessee should be open for
business. At this time, the staff and management are in place and are being
trained. Even as the temporary facility is being located on sight, we are
involved in the process of making decisions relative to a permanent structure.
Within eighteen months, a proposed plan will be presented to the Martin Planning
Commission for their approval. Based on both internal and external studies of
this location, this should prove to be a profitable expansion of First Citizens'
market.

First Citizens Bancshares, Inc. has entered into an agreement
to purchase the assets of Munford Union Bank in Munford, Tennessee. This is a
$115,000,000 asset state chartered bank with locations in Munford (2), Atoka,
Millington and Bartlett. It is our intent to allow this bank to continue to
operate under its current corporate structure, retaining existing employees and
an independent Board of Directors. This acquisition will expand the Bancshares'
franchise into several high growth markets, creating opportunities to market
banking, brokerage, trust, insurance and mortgage loan product and services.

Summary:  This statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This Statement supersedes FASB Statement no. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and
the accounting and reporting provisions of APB Opinion no. 30, Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extaordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in that Opinion). This Statement also amends ARB no. 51, Consolidated Financial
Statements, to eliminate the exception to consolidation for a subsidiary for
which controls is likely to be temporary.

Reasons for issuing This Statement:  Because
Statement 121 did not address the accounting for a segment of a business
accounted for as a discontinued operation under Opinion 30, two accounting
models existed for long-lived assets to be disposed of. The Board decided to
establish a single accounting model, based on the framework established in
Statement 121, for long-lived assets to be disposed of by sale. The Board also
decided to resolve significant implementation issues related to Statement 121.

- Users of financial statements indicated that the diverse
  accounting practices that have developed for obligations associated with the
  retirement of tangible long-lived assets to be disposed of. The Board decided
  to establish a single accounting model, based on the framework established in
  Statement 121, for long-lived assets to be disposed of by sale. The Board also
  decided to resolve significant implementation issues related to Statement 121.

- Obligations that meet the definitions of a liability were not
  being recognized when those liabilities were incurred or the recognized
  liability was not consistently measured or presented.

- Company management indicated that the difference between the
  pooling and purchase methods of accounting for business combinations affected
  competition in markets for mergers and acquisitions.

NON-INTEREST INCOME

The following table reflects restated non-interest income for
the years ending December 31, 2001, 2000, and 1999:

December 31Change from
        Prior Year(in
        thousands)Increase
        (Decrease)
      
      Increase
        (Decrease)Total 2001
      Amount
      Percentage
      Total 2000
      Amount
      Percentage
    
    Total 1999Service Charges on
       Deposit Accounts
    $  3,214
    $    503
    18.55 %
    $  2,711
    $    303
    12.58 %
    $  2,408Trust Fees
    859
    (24)
    (2.72)%
    883
    (38)
    (4.13)%
    921Brokerage
    760
    (190)
    (20.00)%
    950
    452
    90.76 %
    498Other
    1,562
    34
    2.23 %
    1,528
    (316)
    17.14 %
    1,844Total Non-interest
                 income
    $  6,395
    $    323
    5.32 %
    $  6,072
    $    401
    7.07 %
    $  5,671======
    ======
    =======
    ======
    ======
    =======
    =====


Net interest income is the difference between interest and
fees earned on loans, securities and other interest-earning assets (interest
income) and interest paid on deposits and borrowed funds (interest expense). Net
interest income is affected by a number of factors including the level, pricing,
mix and maturity of earning assets and interest-bearing liabilities; interest
rate fluctuations; and asset quality. The Federal Reserve in year 2000 continued
to increase the Federal Funds rates from 5.50% at the end of 1999 to 6.50% at
the end of year 2000. This rising rate environment caused First Citizens
liabilities to reprice at a faster rate than interest rates earned on earning
assets thereby causing a decrease in net interest income of $711 thousand or
3.8% from year-end 1999 to 2000. In 2001 the Federal Funds rate started a steady
decline throughout the year resulting in net interest income of $ 1 million or
6.34% in excess of amounts posted in 2000. Downward pressures exerted on
interest rate margins were offset in part in year 2001 and 2000 with strong loan
growth in excess of 7 percent. Net interest income after the loan loss provision
when comparing 2001, 2000 and 1999 was $18,273 thousand, $17,183 thousand, and
$18,585 thousand. Increases to the provision in 2001and 2000 represents
increased loan growth and elevated charge-offs, which exceeded budget
projections for the years under comparison. Long term mortgage lending income
ended 2001 with record income of $840 thousand up 65% when compared to $508
thousand in 2000. With Federal Funds rate expected to remain steady in 2002,
management expects a favorable impact on this years net interest margins and
income. First Citizens Bank locked in $19 million of FHLB long term borrowings
during the year of 2001 to reduce our exposure to rising rates or interest rate
risk.

Growth in non-interest income has become a key component in
sustaining increased earnings for Bancshares. Non-interest income increased 5.32
percent and 7.07 percent when comparing year 2001 to 2000 and 1999 respectively.
The major components of non-interest income are service charges on deposit
accounts, trust, brokerage and insurance commissions. Service charges on deposit
accounts increased $503 thousand or 18.55% and $303 thousand or 12.58% when
comparing the year 2001, 2000, and 1999. Also contributing to net interest
income was $353,000 received from the sale of insurance products and service
from First Citizens/White & Associates Insurance Company, LLC. Non interest
income as percent of income for 2001 was 14.03% versus 13.73% for 2000 and
13.58% for 1999.

NON-INTEREST EXPENSE

|December 31                                
|-------------------------------------------
|Change from
      Prior Year               
|(in thousands)                             
|                                           
|                                           
|Salaries & Employee
           Benefits    
|Occupancy Expense                          
|Other Operating
         Expense           
|Total Non-Interest
                 expense
|                                           

Non interest expense increased .35 percent in 2001 to $16,705
thousand, compared to $16,646 thousand and $15,409 thousand in 2000 and 1999
respectively. One of the most significant components of non-interest expense is
salaries and employee benefits representing $8,911 thousand in 2001 and $8,751
thousand in 2000 and $8,672 thousand in 1999. At December 31, 2001 First
Citizens had 204 full-time equivalent employees, compared to 209 and 203,
respectively at December 31, 2000 and 1999. The reduction in fulltime-time
equivalent and associated expenses in 2001 related to a reduction in a number of
personnel brought about by improved operational efficiencies gained when merging
operations of banks acquired beginning in 1998. Efficiencies implemented over
the past three years have reduced and/or controlled non-interest expense at
acceptable levels. Going forward, management will continue to focus on improving
the efficiency ratio at a level comparable to peer banks.

Net occupancy and equipment expense was $2,951 thousand, an
increase of .44% over $2,938 thousand in 2000. Equipment and depreciation
expense has been largely driven by information technology demands made on First
Citizens in support of service delivery systems necessary to meet customer needs
as well to place the bank at a competitive advantage.

Other operating expense decreased $114 thousand or 2.29
percent after posting a sharp $946 thousand or 23.58 percent increase in year
2000. The increase from 1999 to 2000 was a result of payouts to two individuals
choosing to exercise contract options available as the result of merger activity
in Obion County in 1998. Total payout exceeded $800 thousand and represented the
extent of First Citizens' contract liability to employees of merged banks.
Other changes in non-interest expense resulted from the cost of employing a
consulting firm to review systems and practices and to make recommendations for
improvements. The level of compensation for the consulting firm was targeted at
one-third or approximately $443 thousand of the increase in annual income
derived by the company. After the first year, all income enhancements accrue to
the benefit of the company.

Efficiencies implemented over the past five
years have reduced and/or controlled non-interest expense at an acceptable
level. Going forward, management will focus on increasing the potential to
generate non-interest income through investment in non-banking subsidiaries such
as insurance agencies, consumer finance companies, and our brokerage business.
In addition, we will concentrate on internal income growth in the bank's
mortgage lending and trust services departments. As we implement new business
lines and grow within existing businesses, non-interest expense can be expected
to increase. However, the increase should be offset by increases in income at
levels targeted by our Capital Plan.

December 31,
      Assets Per Employee
      Assets Per EmployeePeer Group*2001
      $  2,637
      $  3,3502000
      $  2,397
      $  2,8601999
      $  2,328
      $  2,540**1998
      $  2,354
      $  2,4001997
      $  2,151
      $  2,400


*      The Peer Group for First
Citizens changed when we exceeded $500 million in assets

**    1998 includes Bank of Troy and Delta
Finance II. Assets per employee increased due to Troy=s positive position.

COMPOSITION OF DEPOSITS

The average daily amounts of deposits and rates paid on such
deposits are summarized for the periods indicated:

|                                     | As of December 31,          
|------------------------------------ | ----------------------------
|                                     | 2001                        
|                                     | AverageBalance              
|                                     | (Dollars
      in thousands)
|Non-Interest Bearing Demand Deposits | $  37,971                   
|Savings Deposits                     | 126,116                     
|Time Deposits                        | 225,833                     
|Total Deposits                       | $ 389,940                   
|                                     | ========                    

Market share data released as of June 2001 reported First
Citizens' share of the Dyer County deposits at 60.8 percent, while market share
in all counties in which we do business was slightly over 32 percent of total
deposits. The same data released in year 2000 indicated that Dyer County market
share was 57 percent. A market share comparison (table listed on page 9
contained within this report) for banking competition indicated a loss of market
share for all competitor banks. Total deposits increased $26 million or 7.1
percent in 2001 after posting only a $4 million or 1.15 percent increase in
2000. Deposit growth in all quarters of year 2001 was stronger than at any time
in recent years and was reflective of customers' reaction to volatile market
conditions in year 2001. The "Wall Street" money market account,
introduced first quarter 2001 has proven effective in attracting deposits that
in the past had flowed to a similar deposit account offered by brokerage firms.
The growth of the "Wall Street" account was $21 million for 2001.

Average rate paid on total deposits lowered to 3.92% for 2001
compared to 4.30% in 2000 and 3.77% in 1999. Maturity distribution of time
deposits in the amount of $100,000 and over indicates that approximately $ 82
million or 21 % of total deposits will mature and re-price in the next twelve
months resulting in improved net interest margins for the bank. Management of
liquidity has evolved as a challenge for the community banks. Making the right
investment choices, identifying funding sources that impose the least risk to
the bank's asset/liability management process and finding creative ways to
induce deposit growth will ensure our continued success as an independent
community bank. Management is continuously monitoring and enhancing the bank's
product line in order to retain and enhance relationships with existing
customers and attract new customers. The bank introduced overdraft privilege in
February 2001. Overdraft privilege is a discretionary non-contractual service
provided our customers, designed to guard against having their checks returned
by the bank. Each customer is given an overdraft privilege limit based on the
type account the customer has with the bank and other factors. Overdraft
privilege allows the customer to overdraw their account feeling confident checks
will be paid within their assigned limit as long as they make regular deposits
into their account. Customers are charged the normal overdraft fee for each paid
item presented for payment against non-sufficient funds. If the item is over
their limit, it will be returned and a non-sufficient fund fee will be assessed.

SHORT TERM BORROWINGS

As of December 312001
      2000Amount outstanding - end of period
      $           --
      $  34,174Weighted Average Rate of Outstanding
      N/A
      5.55%Maximum Amount of Borrowings at Month End
      $  33,391
      $  54,600Average Amounts Outstanding for Period
      4,727
      49,436Weighted Average Rate of Average Amounts
      3.75%
      5.97%


Long term debt for 2001 is comprised primarily of Federal Home
Loan Bank borrowing totaling $60,575 and Delta Finance Company obligation of
$1,000,000. Note payable of Employee Stock Ownership Plan reflected in long term
debt of 2000 was paid in full in year 2001. Year 2000 long term debt again
included Federal Home Loan Bank borrowings totaling $56.9 million, Employee
Stock Ownership debt of $920 thousand and Delta Finance Company Debt of $1
million.

Average Volume
    Average
       Rate
    Average   Maturity
    Repricing
       FrequencyFHLB Borrowings
    59,424
    5.36%
    3 years
  
  FixedFinance Company Debt
    2,233
    5.88%
    1 year
  
  Fixed


The following table sets forth the maturity distribution of
Certificates of Deposit and other time deposits of $100,000 or more outstanding
on the books of First Citizens on December 31, 2000. The overall total increased
in excess of $2.2 million when compared to the prior year.

|Maturity
      Distribution of Time Deposits in Amounts of $100,000 and Over
|----------------------------------------------------------------------------
|December 31                                                                 
|(in thousands)                                                              
|                                                                            
|                                                                            
|                                                                            
|Maturing in:                                                                
|3 months or less                                                            
|Over 3 through 12
      months                                              
|Over 12 monhts                                                              
|Total                                                                       
|                                                                            

The following table sets forth an analysis of sources and uses
of funds for the years under comparison.

|SOURCES AND
      USES OF FUNDS                                          
|-------------------------------------------------------------------------
|(in thousands)                                                           
|                                                                         
|                                                                         
|Funding Uses                                                             
|Interest-Earning Assets:                                                 
|Loans (Net of Unearned 
              Discounts & Reserve)               
|Taxable Investment Securities                                            
|Non-Taxable Investment
      Securities                                  
|Federal Funds Sold                                                       
|Interest-Earning Deposits in
      Banks                                 
|Total
      Interest-Earning Assets                                      
|Other Uses                                                               
|Total Funding Uses                                                       
|Interest-Bearing Liabilities:                                            
|Savings Deposits                                                         
|Time Deposits                                                            
|Federal Funds Purchased and
           Other Interest-Bearing Liabilities
|Total
      Interest-Bearing Liabilities                                 
|Demand Deposits                                                          
|Other Sources                                                            
|Total
      Funding Sources                                              
|                                                                         

SUMMARY - AVERAGE BALANCE SHEET AND NET
INTEREST INCOME ANALYSIS
(FIRST CITIZENS NATIONAL BANK)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Monthly Average
      Balances and Interest Rates
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 2001                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Average
      OutstandingBalance                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (Dollars in
      Thousands)                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ASSETS                                           
|Interest-earning
      assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                  
|Total
      loans (1) (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ 359,296                                        
|Investment securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                  
|Taxable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 83,313                                           
|Exempt (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 14,601                                           
|Interest Earning Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 933                                              
|Federal funds sold                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 7,613                                            
|Lease financing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | --                                               
|Total interest earning assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 465,756                                          
|Non-Interest earning assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                  
|Cash and Due From Banks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 16,499                                           
|Bank Premises and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 14,116                                           
|Other Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 23,748                                           
|Total Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ 520,119                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ========                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | LIABILITIES AND
       SHAREHOLDERS' EQUITY      
|Interest-bearing
      liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                  
|Savings deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | $ 126,116                                        
|Time
      deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 225,833                                          
|Federal
      funds purchased and Other
          Interest Bearing Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                               | 78,252                                           
|Total interest-bearing liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 430,201                                          
|Noninterest- bearing
      liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                  
|Demand deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 37,971                                           
|Other
      liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 3,598                                            
|Total liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 471,770                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                  
|Shareholders' equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 48,349                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                  
|Total liabilities and
      shareholders'
            equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ 520,119                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ========                                         
|Net interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                  
|Net yield on average earning assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                  
|_____________________
      (1)  Loan totals are shown net of interest collected, not earned and
      loan loss reserves.
      (2)  Fee Income is included in interest income and the computations
      of the yield on loans.
      (3)  Includes loans on non-accrual status.
      (4)  Interest and rates on securities which are non-taxable for
      Federal Income Tax purposes are presented on a taxable equivalent basis.
      (5)  Includes interest bearing deposit accounts excluding time
      deposits.



|VOLUME/RATE
      ANALYSIS                                                                   
|---------------------------------------------------------------------------------------------
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Interest Earned On:                                                                          
|Loans                                                                                        
|Taxable investments                                                                          
|Tax Exempt Investment Securities                                                             
|Interest Bearing Deposits with
      Other Banks                                             
|Federal Funds Sold and
      Securities purchased
            under agreement to resell      
|Lease Financing                                                                              
|Total Interest Earning Assets                                                                
|Interest Paid On:                                                                            
|Savings deposits                                                                             
|Time
      deposits                                                                          
|Federal Funds Purchased and
      Securities Sold Under
              Agreement to Repurchase
|Total Interest Bearing Liabilities                                                           
|Net Interest Earnings                                                                        
|                                                                                             

A summary of average interest earning assets and
interest bearing liabilities is set forth in the preceding table together with
average yields on the earning assets and average cost on the interest bearing
liabilities. Interest earning assets total $465,756 thousand at an average rate
of 8.48%, interest earned of $39,542 thousand for the year 2001 compared to
$433,404 thousand, average rate of 8.87% and interest earned of $38,463 thousand
in year 2000. Interest earning assets in year 1999 total $429,208 thousand,
average rate of 8.48% and earned interest income of $36,413 thousand. Interest
bearing liabilities total $430,201 thousand, interest expense of $19,272
thousand in year 2001 compared to $396,315 thousand, interest expense of $19,543
thousand and $385,104 thousand, interest expense of $16.780 thousand in years 2000 and 1999 respectively. The average rate
for those years was 4.47%, 4.93% and 4.36% respectively. A reduction in the
Federal Funds rate from 6.50% in September 2000 to the 1.75 % at December 31,
2001, materially reduced cost of funds resulting in improved interest rate
margins and net income levels for the bank. Average volume change of 2.8 million
for total interest earning assets when comparing 2001 to 2000 was primarily
caused by average change in loans of 2.7 million. The average rate change for
the same time period resulted in decreased volume change of $1.8 million
comprised significantly of lower average rate charged on loans. A comparison of
total interest bearing liabilities for year-end 2001 and 2000 indicates average
volume and average rate change was an increase of $1.6 million and a decrease of
$1.9 million. Net Interest earnings as a result of average volume and average
rate change was $1.3 million and $82 thousand respectively.

|                                                   | December 31       
|-------------------------------------------------- | ------------------
|                                                   | (In
    Thousands)
|                                                   | 2001              
|Real Estate Loans:                                 |                   
|Construction                                       | $   36,862        
|Mortgage                                           | 225,743           
|Commercial, Financial and 
     Agricultural Loans | 64,496            
|Installment Loans to Individuals                   | 39,200            
|Other Loans                                        | 2,725             
|TOTAL LOANS                                        | $ 369,026         



December 31,
        2001 as Compared to December 31, 2000(in
        thousands)Loan Category
    
    Amount
      of         Increase (Decrease)
    %
      of              Increase (Decrease)Real Estate
    $  31,370
    13.56%Commercial, Financial and
           Agricultural
    793
    1.24%Installment Loans to Individuals
    (3,551)
    8.31%Other Loans
    (542)
    16.59%TOTAL LOANS
    $  28,067
    8.23%=======
    ========


Loan growth during year 2001 resulted primarily from
increases of $30 million in mortgage and real estate construction loans. Total
loan growth was $28 million or 8.2 percent compared to $16 million or 5 percent
in year 2000. Commercial and agriculture loans posted less than a million
dollars in growth after a volume increase in 2000 of more $3 million. Growth in
the agricultural segment of the portfolio has been negligible as low commodity
prices seem to set a standard and farmers have become more dependent on federal
disaster payments. The average number of farms in Dyer County is down to 510
with only 270 fulltime farm operators each managing approximately 445 acres of
land. However, the economic impact of Agriculture in Dyer County in 2001 was
over $61 million. First Citizens' as the largest agriculture lender in our
trade area, takes pride in its' contribution to our local economy through
support of Agri business. Economists from the Food and Agricultural Policy
Research Institute and the Agriculture and food Policy Center have projected
that U.S. net farm income could drop more than $9 billion over a two year period
beginning in year 2000.

Installment loans to individuals dropped from $42,754 thousand
in 2000 to $39, 200 thousand in 2001. Competitors offering zero percent
financing has enticed consumers to pay off existing car loans held at banks in
favor of new car purchases financed at the dealership.Deterioration in
the economy in general has resulted in tightening of loan underwriting standards
and sacrificed a higher level of growth to ensure quality in the portfolio. The
Jackson, Tennessee Trustee's office reported a 61% increase in the number of
Dyer County families filing Chapter 13 Bankruptcy from 2000 to 2001. This past
year 228 Dyer County families have filed. Efforts are in place and will continue
to provide money management education for families in the county filing
bankruptcy. Education programs offered focus on managing family funds, creating
and maintaining a family budget, setting money goals and establishing a money
management center in the home. Program are established in local high schools
that focus on budgeting, writing checks and balancing a checking account. Teens
also practice consumer decision making skills.

The First Citizens loan portfolio is made up of quality
credits and is well diversified with a concentration of credit in real estate
related loans. Total real estate related loans are approximately $107,694
thousand at year-end 2001. The largest category of loans is residential mortgage
loans, comprising 29.99 percent of total loans, which historically have low loan
loss experience. The following table lists categories of real estate loans,
volume and category type as a percentage of total loans and loan policy limits
established for each category:

Category

Volume
Actual   Percentage
Policy    PercentageAgriculture
  $    19,309,636
5.38%
20.00%Land Acquisition
  $    21,015,506
5.86%
10.00%Development & Commercial Construction
  $    47,267,312
13.17%
30.00%Residential Construction
  $      7,470,733
2.08%
10.00%Residential Mortgage
  $  107,693,900
29.99%
40.00%


The provision for loan losses is $4,015 thousand, $3,763
thousand, and $3,718 thousand at December 31, 2001, 2000, and 1999 respectively.
An increase in the provision for loan losses of 7 percent when compared to same
time period in 2000 is reflective of portfolio growth and deterioration in
quality brought about by an slowing economy. Overall portfolio quality remains
high and the reserve is considered adequate to cover anticipated losses.
Projected loan growth for the year 2002 is approximately 5 percent.

REPOSSESSED REAL PROPERTY:

The book value of repossessed real property held by First
Citizens was $1.7 million at December 31, 2001 compared to $390 thousand at
year-end 2000 resulting in a net increase of $1.3 million. Properties foreclosed
on one borrower in year 2001 and placed in other real estate totals $805,000 or
62 percent of the net increase. Foreclosed properties have been listed with
local realtors and a plan to market properties is in place.

Loan Administration sets policy guidelines
approved by the Board of Directors regarding portfolio diversification and
underwriting standards. Loan policy also includes board approved guidelines for
collateralization, loans in excess of loan to value limits, maximum loan amount,
maximum maturity and amortization period for each loan type. Policy guidelines
for loan to value ratio and maturities related to various collateral as follows:

Collateral
    
    Maximum  Amortization
    Maximum LTVReal Estate
    Various (*)
    Various (*)Equipment
    5 Years
    75%Inventory
    5 Years
    50%A/R
    5 Years
    75%Livestock
    5 Years
    80%Crops
    1 Year
    50%*Securities
    10 Years
    75% (Listed)
      50% (Unlisted)(*) See discussion
      * Maximum LTV on margin stocks (stocks not listed on a national exchange)
      when
         proceeds are used to purchase or carry same, shall be 50%.


Diversification of the banks' real estate
portfolio is a necessary and desirable goal of the bank's real estate loan
policy. In order to achieve and maintain a prudent degree of diversity, given
the composition of the bank's market area and the general economic state of the
market area, the bank will strive to maintain a real estate loan portfolio
diversification based upon the following:

- Agricultural loans totaling in the aggregate no more than
20% of the Bank's total loans.
- Land acquisition and development loans totaling in the
aggregate no more than 10% of the Bank's total loans.
- Commercial construction loans totaling in the aggregate no
more than 10% of the Bank's total loans.
- Residential construction loans totaling in the aggregate no
more than 10% of the Bank's total loans.
- Residential mortgage loans totaling in the aggregate no more
than 40% of the Bank's total loans.
- Commercial loans totaling in the aggregate no more than 30%
of the Bank's total loans.

It is the policy of FCNB that no real estate loan will be made
(except in accordance with the provisions for certain loans in excess of
supervisory limits provided for hereinafter) that exceed the loan-to-value
percentage limitations ("LTV limits") designated by category as
follows:

Loan Category
      LTV LimitRaw Land
      65%Land Development or Farmland
      75%Construction:Commercial, multi-family, and
        other non-residential
      80%1-to-4 family residential
      80%Improved Property
      80%Owner-occupied 1-to-4 family and home
        equity
      80%


Multi-family construction loans include loans
secured by cooperatives and condominiums. Owner-occupied 1-to-4 family and home
equity loans which equal or exceed 90% LTV at origination must have either
private mortgage insurance or other readily marketable collateral pledged in
support of the credit.

On occasion, the Loan Committee may entertain
and approve a request to lend sums in excess of the LTV limits as established by
policy, provided that:

The request is fully documented to support
the fact that other credit factors justify the approval of that particular loan
as an exception to the LTV limit;

The loan, if approved, is designated in the
Bank's records and reported as an aggregate number with all other such loans
approved by the full Board of Directors on at least a quarterly basis;

The aggregate total of all loans so
approved, including the extension of credit then under consideration, shall not
exceed 50% of the Bank's total capital; and

Provided further that the aggregate
portion of these loans in excess of the LTV limits that are classified as
commercial, agricultural, multi-family or non-1-to-4 family
residential property shall not exceed 30% of the Bank's total capital.

Amortization Schedules: Every loan must have a
documented repayment arrangement. While reasonable flexibility is
necessary to meet the credit needs of the Bank's customers, in general all loans
should be repaid within the following time frames:

Loan Category
      Amortized PeriodRaw Land
      10 YearsConstruction:Commercial, multi-family, and
        other non-residential
      20 Years1-to-4 family residential
      20 YearsImproved Property/Farmland
      20 YearsOwner-occupied 1-to-4 family and home
        equity
      20 Years


The average yield on loans of First Citizens National Bank for
the years indicated are as follows:

|2001  | 2000  | 1999  | 1998  | 1997 
|----- | ----- | ----- | ----- | -----
|9.22% | 9.57% | 9.10% | 9.72% | 9.70%

The aggregate amount of unused guarantees, commitments to
extend credit and standby letters of credit was $66,172,000 at December 31,
2001.

LOAN MATURITIES
      AND SENSITIVITY TO CHANGES IN INTEREST RATESDue in One
      Year or Less
    Due after one year
      but withinfive years
    Due after fiveyears(Dollars
      in thousands)Real Estate
    $  52,919
    $   
      56,518
    $  53,618Commercial, Financial and Agricultural
    30,390
    30,605
    3,501All Other Loans
    10,127
    31,586
    212Totals
    $  93,436
    $  118,709
    $  56,881=======
    =======
    =======


Loans with Maturities After One Year for which:                                                                                                    
(in thousands)
Interest Rates are Fixed or Predetermined                                    
$294,562
Interest Rates are Floating or Adjustable                                    
$  74,464

The degree of interest rate risk to which a bank is subjected
can be controlled through a well managed asset/liability management program.
First Citizens controls interest rate risk by matching assets and liabilities,
better explained by employing interest-sensitive funds in assets that are also
interest sensitive. First Citizens is liability sensitive since bank liabilities
re-price at a much quicker rate than assets. This means that in a rising rate
environment net income of the bank would be diluted, while a flat rate or a
lower rate environment would result in stable to improved interest rate margins
and net income. In recent years the interest rate environment as well as
competitive pricing strategies of the bank's competition has resulted in a
transition in the loan portfolio from primary floating or adjustable rates to a
more predetermined or fixed rate portfolio. One of the tools used to ensure
market rate return is variable rate loans totaling $74 million or loans held in
the portfolio that will mature in one year or less totaling $93.4 million. A
total of 46 percent of average loans will reprice either immediately with a
change in interest rates or within 12 months, while $218.7 million or 61 % of
average outstanding loans will mature after one year, but within five years.
Only $56.9 million or approximately 16 percent of average outstanding loans bear
maturities of greater than five years.

NON-PERFORMING LOANS

|Nonaccrual, Restructured and Past Due Loans and
Foreclosed Properties                             
|--------------------------------------------------------------------------------------------------
|First Citizens National Bank                                                                      
|(in thousands)                                                                                    
|December 31,                                                                                      
|                                                                                                  
|                                                                                                  
|Nonaccrual Loans                                                                                  
|Restructured Loans                                                                                
|Foreclosed Property Other Real Estate                                                             
|Other Repossessed Assets                                                                          
|Loans and Leases 90 days Past due and still 
    accruing interest                                
|Total Non-performing Assets                                                                       
|                                                                                                  
|Non-performing assets as a percent of loans and leases
    plus foreclosed property at end of year
|Allowance as a percent of:                                                                        
|Non-performing assets                                                                             
|Gross Loans                                                                                       
|Addition to Reserve as a percent of Net
Charge-Offs                                               
|Loans and leases 90 days past due as a percent of
loans
      and leases at year end              
|Recoveries as a percent of Gross Charge-Offs                                                      

Non performing assets consists of non-accrual loans,
restructured loans, foreclosed properties, and loans and leases 90 days past due
and still accruing interest. Non performing loans increased $2.6 million in 2001
to $4.6 million or 1.23 percent of total loans at December 31, 2001. This
compares to $1.9 million or .56 % of total loans in 2000. First Citizens
non-accrual loans totaling $1.6 million are primarily centered with one borrower's
credits totaling $633 thousand or 40 percent of the total. The balance of the
non-accrual total consists of many smaller loans that are well secured and in
the process of collection. Foreclosed property was discussed previously in the
discussion of repossessed real property. Loans and leases 90 days past due and
still accruing interest consists of smaller consumer loans and are not
necessarily reflective of a deterioration of any segment of the loan portfolio.
Allowance for Loan loss as a percent of non- performing assets was 88.08%,
194.06% and 303.51% respectively for the years ending December 31, 2001, 2000,
and 1999. The allowance as a percent of gross loans for the same time periods
was 1.08%, 1.10%, and 1.14%. Loan policy calls for an allowance balance of at
least 1% of total loans. Continued improvements reflected in the financial
ratios are indicative of well communicated loan policies and procedures.
Categorization of a loan as non-performing is not in itself a reliable indicator
of potential loan loss. The banks' policy states that the bank shall not accrue
interest or discount on (1) any asset which is maintained on a cash basis
because of deterioration in the financial position of the borrower, (2) any
asset for which payment-in-full of interest or principal is not expected, or (3)
any asset upon which principal or interest has been in default for a period of
90 days or more unless it is both well secured and in the process of collection.
For purposes of applying the 90 day due test for the non-accrual of interest
discussed above, the date on which an asset reaches non-accrual status is
determined by its contractual term. A debt is well secured if it is secured (1)
by collateral in the form of liens or pledges or real or personal property,
including securities that have a realizable value sufficient to discharge the
debt (including accrued interest) in full, considered to be proceeding in due
course either through legal action, including judgement enforcement procedures, or,
in appropriate circumstances, through collection efforts not involving legal
action which are reasonably expected to result in repayment of the debt or in
its restoration to a current status. Loans that represent a
potential loss to First Citizens are adequately reserved for in the provision
for loan losses.

Interest income on loans is recorded on an
accrual basis. The accrual of interest is discontinued on all loans, except
consumer loans, which become 90 days past due, unless the loan is well secured
and in the process of collection. Consumer loans which become past due 90 to 120
days are charged to the allowance for loan losses. The gross interest income
that would have been recorded for the twelve months ending December 31, 2000 if
all loans reported as non-accrual had been current in accordance with their
original terms and had been outstanding throughout the period is $90,000.
Interest income on loans reported as ninety days past due and on interest
accrual status was $94,000 for 2001. Loans on which terms have been modified to
provide for a reduction of either principal or interest as a result of
deterioration in the financial position of the borrower are considered to be
"Restructured Loans". First Citizens has no Restructured Loans for the
period being reported.

Certain loans contained on the bank's Internal
Problem Loan List are not included in the listing of non-accrual, past due or
restructured loans. Management is confident that, although certain of these
loans may pose credit problems, any potential for loss has been provided for by
specific allocations to the Loan Loss Reserve Account. Loan officers are
required to develop a "Plan of Action" for each problem loan within
their portfolio. Adherence to each established plan is monitored by Loan
Administration and re-evaluated at regular intervals for effectiveness.

|LOAN LOSS EXPERIENCE AND RESERVE FOR LOAN
LOSSES                               
|-------------------------------------------------------------------------------
|(in thousands)                                                                 
|December 31,                                                                   
|                                                                               
|                                                                               
|Average Net Loans Outstanding                                                  
|Balance of Reserve for Loan Losses at Beginning of Period                      
|Loan Charge-Offs                                                               
|Recovery of Loans Previously Charged Off                                       
|Net Loans Charged Off                                                          
|Additions to Reserve Charged to Operating Expense                              
|Changes incident to Mergers                                                    
|Balance at End of Period                                                       
|                                                                               
|Ratio of Net Charge-Offs during quarter to
       Average Net Loans Outstanding

The preceding table summarizes activity posted
to the Loan Loss Reserve Account for the past five years. The summary includes
the average net loans outstanding; changes in the reserve for loan losses
arising from loans charged off and recoveries on loans previously charged off;
additions to the reserve which have been charged to operating expenses; and the
ratio of net loans charged off to average loans outstanding. Changes to the
Reserve Account for the year just ended consisted of Loans charged off of
$2,017,000 (2) Recovery of loans previously charged off $625,000 and (3)
Additions to reserves totaling $1,644,000.

The provision for loan loss reserves was
increased by 96% over the 1999 allocation. A major portion of the increase
can be attributed to two related credits and does not reflect an overall decline
in credit quality within the portfolio. In view of a slowing economy and the
failure of congress to address inequities in Bankruptcy Laws, management and
the Board will continue to monitor the adequacy of the reserve and make
adjustments when necessary.

An analysis of the allocation of the allowance
for Loan Losses is made on a fiscal quarter at the end of the month, (February,
May, August, and November) and reported to the board at its meeting immediately
preceding quarter-end. Requirements of FASB 114 & 118 have been incorporated
into the policy for Accounting by Creditor for Impairment of a loan. A loan is
impaired when it is probable that a creditor will be unable to collect all
amounts due of principal and interest according to the original contractional
terms of the loan. First Citizens adopted the following as a measure of
impairment: (1) Impairment of a loan at First Citizens shall exist when the
present value of expected future cash flows discounted at the loans effective
interest rate impede full collection of the contract; and (2) Fair Value of the
collateral, if the loan is collateral dependent, indicates unexpected collection
of full contract value. The Impairment decision will be reported to the Board of
Directors and other appropriate regulatory agencies as specified in FASB 114 and
118. The bank will continue to follow regulatory guidelines for income
recognition for purposes of generally accepted accounting principles, as well as
regulatory accounting principles.

An annual review of the loan portfolio to
identify the risks will cover a minimum of 70% of the gross portfolio less
installment loans. In addition, any single note or series of notes directly or
indirectly related to one borrower which equals 25% of the bank's legal lending
limit will be included in the review automatically.

In order to predict probable losses on loans,
allowance determination policy shall reflect historical losses on pools of loans
and the relationship to actual previously predicted losses. If significant
differences are evident, then justification shall be addressed. If probable
losses are detected then appropriate assets shall be identified as impaired,
they will be analyzed, and specific allocations funded in order to avoid
extraordinary charges to reserve. It shall be incumbent upon loan administration
to ensure that assets are graded for quality in a timely manner and appropriate
reserves maintained, based on internal analysis. Local trends in sales tax
receipts, unemployment, and economic development shall be assessed quarterly and
adjustments made to allowance based on upward or downward trends to these
elements. National economic conditions shall be monitored but direct a much
lesser impact on allowance determination.

For analysis purposes, the loan portfolio is
separated into four classifications:

1. Pass - Loans that have been reviewed and
graded high quality or no major deficiencies.
2. Watch - Loans which, because of unusual
circumstances, need to be supervised with slightly more attention than is
common.
3. Problem - Loans which require additional
collection efforts to liquidate both principal and interest.
4. Specific Allocation - Loans, in total or in
part, in which a future loss is possible.

Examples of factors taken into consideration
during the review are: Industry or geographic economic problems, sale of
business, change of or disagreement among management, unusual growth or
expansion of the business, past due status of either principal or interest for
90 days, placed on non-accrual or renegotiated status, declining financial
condition, adverse change in personal life, frequent overdrafts, lack of
cooperation by borrower, decline in marketability or market value of collateral,
insufficient cash flow, and inadequate collateral values.

Identification of impaired loans from
non-performing assets as well as bankrupt and doubtful loans is paramount to the
reserve analysis. Special allocations shall support loans found to be collateral
or interest cash flow deficient. In addition an allowance shall be determined
for pools of loans including all other criticized assets as well as small
homogeneous loans managed by delinquency. In no circumstance shall the reserve
fall below 1% of total loans less government guarantees. The following is a
sample of information analyzed quarterly to determine the allowance for loan
losses.

LOAN LOSS
        ALLOWANCE ANALYSISLOSS 1 YR.
      AVERAGE BALANCE 1 YR.
      PERCENT
      CURRENT BALANCE
      RESERVE REQUIREDI.
      CREDIT
        CARDS
    
    $
    GROSS $
    %
    $
    $II.
    INSTALL.
      LOANS
    $
    NET $
    %
    $
    $III.
    IMPAIRED
      WITH ALLOCATIONS
    
    
    
    $
    $IMPAIRED
      WITHOUT ALLOCATIONS
    
    
    
    $
    $ALLOWANCEIV.
    DOUBTFUL
    
    
    50.00%
    $
    $SUBSTANDARD
    
    
    10.00%ACCOUNTS
      RECEIVABLE FACTORING
    
    
    1.00%WATCH
    
    
    5.00%OTHER
      LOANS NOT LISTED PREVIOUSLY LESS SBA/FMHA GUARANTEED PORTIONS
    
    
    0.75%TOTAL LOANS
    
    
    
    $V.
    LETTERS
      OF CREDIT
    
    
    0.75%
    $
    $
  VI.
    OTHER
      REAL ESTATE OWNED
    
    
    
    
    $RESERVE
        REQUIREDRESERVE
        BALANCEEXCESS
        (DEFICIT)RESERVE
        AS % OF TOTAL LOANS
      
      
      %PEER
        GROUP %
      
      
      %LOSS
        EXPERIENCE III & IV (AVERAGE LAST 3 YEARS)
      
      % OR $


Accounting for adjustments to the value of
Other Real Estate when recorded subsequent to foreclosure is accomplished on the
basis of an independent appraisal. The asset is recorded at the lesser of its
appraised value or the loan balance. Any reduction in value is charged to the
allowance for possible loan losses. All other real estate parcels are appraised
annually and the carrying value is adjusted to reflect the decline, if any, in
its realizable value. Such adjustments are charged directly to expense.

Management estimates the approximate amount of
charge-offs for the 12 month period ending December 31, 2002 to be as follows:

|                                       | Amount      
|-------------------------------------- | ------------
|Domestic:                              |             
|Commercial, Financial and Agricultural | $   600,000 
|Real Estate - Construction             | --          
|Real Estate - Mortgage                 | 150,000     
|Installment Loans to individuals       | 250,000     
|Lease financing                        | --          
|01/01/02 through 12/31/02 Total        | $  1,000,000



|                                                | Year Ending December 31,
|----------------------------------------------- | ------------------------
|                                                | (in thousands)          
|Charge-Offs:                                    | 2001                    
|Domestic:                                       |                         
|Commercial, Financial and Agricultural          | $    1,537              
|Real Estate - Construction                      | --                      
|Real Estate - Mortgage                          | 480                     
|Installment Loans to individuals
& credit cards | 795                     
|Lease financing                                 | --                      
|Total                                           | $   2,017               
|Recoveries:                                     |                         
|Domestic:                                       |                         
|Commercial, Financial and Agricultural          | $      336              
|Real Estate - Construction                      | --                      
|Real Estate - Mortgage                          | 95                      
|Installment Loans to individuals
& credit cards | 194                     
|Lease financing                                 | --                      
|Total                                           | $      625              
|Net Charge-offs                                 | $   1,392               



|                                    | Composition of Investment Securities
|----------------------------------- | ------------------------------------
|                                    | December 31,
(in thousands)         
|                                    | 2001                                
|U.S. Treasury & Government Agencies | $   74,335                          
|State & Political Subdivisions      | 17,798                              
|All Others                          | 12,141                              
|TOTALS                              | $ 104,274                           
|                                    | =======                             



|                                                                                                                              | MATURITY AND YIELD ON SECURITIES
 December 31, 2001
      (in thousands)
|----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------
|                                                                                                                              | Maturing
      Within One Year                                          
|                                                                                                                              | Amount                                                                  
|U.S. Treasury and Government Agencies                                                                                         | $ 2,000                                                                 
|State and Political Subdivisions*                                                                                             | 316                                                                     
|All Others                                                                                                                    | --                                                                      
|Totals                                                                                                                        | $ 2,316                                                                 
|                                                                                                                              | ======                                                                  
|________________________________
      * Yields on tax free investments are stated herein on a taxable equivalent
      basis |                                                                         



|HELD TO MATURITY & AVAILABLE FOR SALE
SECURITIES                                                                                                      
|------------------------------------------------------------------------------------------------------------------------------------------------------
|December 31, 2001                                                                                                                                     
|(in thousands)                                                                                                                                        
|                                                                                                                                                      
|                                                                                                                                                      
|U.S. Treasury Securities                                                                                                                              
|U.S. Government agency and corporation obligations                                                                                                    
|Securities issued by states and political subdivisions in the
U.S.:                                                                                   
|Taxable Securities                                                                                                                                    
|Tax-exempt securities                                                                                                                                 
|U.S. Securities:                                                                                                                                      
|Debt Securities                                                                                                                                       
|Equity Securities (including Federal Reserve stock)                                                                                                   
|Foreign securities:                                                                                                                                   
|Debt Securities                                                                                                                                       
|Equity Securities                                                                                                                                     
|                                                                                                                                                      
|Total (sum of column A items 1 through 5.a must equal Schedule
HC, item 2.a and sum of column D, items 1 through 5.b must equal Schedule HC,
item 2.b)

(1) Includes equity securities without readily determinable
fair values at historical cost.

(2) Includes Small Business Administration "Guaranteed
Loan Pool Certificates," U.S. Maritime Administration obligations, and
      Export-Import Bank participation certificates.

(3) Includes obligations (other than pass-through securities,
CMOs, and REMICs) issued by the Farm Credit System, the Federal Home Loan
      Bank
System, the Federal Home Loan Mortgage Corporation, the Federal National
Mortgage Association, the Financing Corporation,
      Resolution Funding Corporation,
the Student Loan Marketing Association, and the Tennessee Valley Authority.

Objectives of the investment portfolio
management are to: provide safety of principal, adequate liquidity, insulate
GAAP capital against excessive changes in market value, insulate earnings from
excessive change, and finally optimize investment performance. Investments also
serve as collateral for government, public funds, and large depositors. The
investment portfolio: which currently totals $104,274,000, is comprised of US
Government Obligations of $74,335,000, State and Political Obligations of
$17,798,000, and all others of $12,141,000. Fixed rate holdings comprise 94% of
the portfolio. The average life, maturity, and yield of the investments were
4.22 years, 5.70 years, and 5.64%.

Our investment strategy has been to classify most of the
portfolio as available for sale (97%), which are carried on the balance sheet at
fair market value. This gives management flexibility to actively manage the
portfolio under various market conditions. First Citizens does not use the
trading account. The portfolio has decreased $5.4 million from 1998 to 2001 due
to loan demand. Investments grew $1.2 million when comparing 2001 to 2000. The
cash flow statement reflects a material amount of maturities and called bonds
for the year of 2001. First Citizens invested most of these funds back into the
market at various time frames to reduce market exposure. Our intent is too rely
more on mortgage backed investments that have cash flows paying monthly and
bullet type investments. Mortgage backed investments account for 50.30% of the
portfolio and we will increase this towards 60%.

At December 2001, the investment portfolio had an unrealized
gain (net of tax) of $751,000 compared to the prior year figure of ($283,000).
The falling rate conditions as reflected in the New York Prime decreasing from
9.50% to 4.75% had a positive impact on the portfolio. In terms of price
sensitivity, we estimate that if rates go: up 100 basis points, the market value
of the portfolio would decrease $.78 million, up 200 basis points, the market
value of the portfolio would decrease $2.7 million, down 100 basis points, the
market value would increase $1.4 million, and down 200 basis points, the market
value would increase $2 million.

On July 19, 2000, the Board approved the
organization of Nevada I, a corporation organized and existing under the laws of
the state of Nevada. The sole activities of Nevada I are the ownership of stock
in Nevada II and the ownership of certain loans pursuant to a Participation
Agreement. Nevada I will neither own nor lease any tangible property. Nevada I
will have an employee located in the state of Nevada and officers and directors
located in the state of Tennessee. Permission was also granted to organize
Nevada II, which is also a corporation organized and existing under the laws of
the state of Nevada. Nevada II board of directors consists of three persons, two
Tennessee residents and one Nevada resident. All board meeting will held in Las
Vegas, Nevada. The principal activity of Nevada II is to acquire and sell
investment securities as well as collect the income from the portfolio. The sole
purpose will be to transfer the bank's investment activity to the Nevada II
Corporation. First Citizens National Bank income is projected to increase in
excess of $300,000 the first year of operations. In conjunction with the Nevada
Corporation and transfer of the investment portfolio, First Tennessee Financial
will assume management of the portfolio.

FASB 115 required banks to maintain separate
investment portfolios for Held-to-Maturity, Available for Sale, and Trading
Account Investments. FASB 115 also requires banks to mark to market the
Available for Sale and Trading Account investments at the end of each calendar
quarter. Held-to-Maturity account investments are stated at amortized cost on
the balance sheet. All purchase and sale transactions in 2001 were made in
accordance with specifications set forth in FASB 115. The trading account at
December 31, 2000 maintained a zero balance.

First Citizens National Bank engaged in
derivative activity as defined by FASB 133 (Reference Footnote 2 of the
Accountant's Report page 68).

Gains/Losses reflected in year-end income
statements attributable to trading account securities for the five year period
ending 12/31/00 are zero.

The following table allocates by category unrealized
Gains/Losses within the total portfolio as of December 31, 2001 (in thousands):

|                                                                                            | Unrealized | Net   
|------------------------------------------------------------------------------------------- | ---------- | ------
|                                                                                            | Gains      | Losses
|                                                                                            |            |       
|U.S. Treasury Securities and Obligations of
      U.S. Government Agencies and Corporations | $  1,039   | $  140
|Obligations of States and Political
      Subdivisions                                      | 307        | 57    
|Federal Reserve and Corporate Stock                                                         | 172        | --    
|Totals                                                                                      | $ 1,518    | $  197
|                                                                                            | ======     | ====  

LIQUIDITY AND INTEREST RATE SENSITIVITY

The primary functions of asset/liability management are to
assure adequate liquidity and maintain an appropriate balance between interest
sensitive earning assets and interest bearing liabilities. Liquidity management
involves the ability to meet the cash flow requirements of customers who may be
either depositors wanting to withdraw funds or borrowers needing assurance that
sufficient funds will be available to meet their credit needs. First Citizens'
liquidity position improved dramatically in year 2001, as a result of called
investments and above average deposit growth. Other sources of liquidity readily
available is a diversified based of wholesale borrowings that include federal
home loan bank, brokered certificates of deposits, federal funds purchased, and
securities sold under agreements to repurchase.

Lines of Credit made available through Federal Home Loan Bank
totaling $129,000,000 provide a fixed level of funds at a predetermined rate.
Other lines of credit established with Correspondent banks total $38,500,000. Of
the $167.5 million available, only $62 million has been advanced as a source of
funds. Correspondent Bank Lines provide additional liquidity required for daily
settlement. It is anticipated that these sources of funds will continue to be utilized as a tool in managing liquidity.

As a result, the company has experienced no
problem with liquidity during any of the years under review and anticipates that
all liquidity requirements will be effectively met in the future. Adherence to a
strict Asset/Liability Management Policy will ensure our ability to effectively
manage future interest rate risk.

When evaluating liquidity, comparison is made between funding
needs and the current level of liquidity, plus liquidity that would be likely be
available from other sources. This comparison should determine whether funds
management practices are adequate. Bank management should be able to manage
unplanned changes in funding sources, as well as react to changes in market
conditions that could hinder the bank's ability to quickly liquidate assets
with minimal loss. Funds management practices should ensure that the bank does
not maintain liquidity at too high a cost or by relying unduly on wholesale or
credit-sensitive funding sources. Office of the Comptroller of the Currency has
established benchmarks for comparison. The following areas are considered
Liquidity Red Flags:

- Significant increases in reliance on wholesale funding.
- Significant increases in large certificates of deposit,
  brokered deposits, or deposits with interest rates higher than the market.
- Mismatched funding
  - funding long-term assets with
  short-term liabilities or short-term assets with long-term liabilities.
- Significant increases in borrowings.
- Significant increases in dependence on funding sources other
  than core deposits.
- Reduction in borrowing lines by correspondent banks.
- Increases in cost of funds.
- Declines in levels of core deposits.
- Significant decreases in short-term investments.

Liquidity is a concern of the Asset/Liability and will
continue to seek alternative funding sources that are conducive to our net
interest margin strategies. The following table reflects First Citizens position
as of December 31, 2001 in comparison to the OCC Liquidity Benchmarks.

OCC Liquidity Benchmark
      Actual
        12/31/01Short Term Liabilities/Total Assets > 20%
    
    21.35%On Hand Liquidity to Total Liabilities < 8%
  
  10.50%Loan to Deposits < 80%
  
  91.45%Wholesale Funds/Total Sources > 15%
  
  16.66%Non Core Funding Dependence > 20%
  
  68.15%


There are no known trends or uncertainties
that are likely to have a material affect on First Citizens' liquidity or capital
resources. There currently exists no recommendations by regulatory authorities
which if implemented, would have such an affect. There are no matters of which
management is aware that have not been disclosed.

Interest rate sensitivity varies with
different types of interest-earning assets and interest-bearing liabilities.
Overnight federal funds, on which rates change daily, and loans which are tied
to the prime rate are much more sensitive than long-term investment securities
and fixed rate loans. The shorter term interest sensitive assets and liabilities
are the key to measurement of the interest sensitivity gap. Minimizing this gap
is a continual challenge and a primary objective of the asset/liability
management program.

The following condensed gap report provides an
analysis of interest rate sensitivity of earning assets and costing liabilities.
First Citizens Asset/Liability Management Policy provides that the net interest
income exposure to Tier I Capital shall not exceed 2.00%. Interest rate risk is
separated and analyzed according to the following categories of risk: (1) repricing, (2) yield curve, (3) option risk, (4)
price risk and (5) basis risk. Trading assets are utilized infrequently and are
addressed in the investment policy. Any unfavorable trends reflected in interest
rate margins will cause an immediate adjustment to the bank=s gap position or
asset/liability management strategies. The following data schedule reflects a
summary of First Citizens= interest rate risk using simulations. The projected
12 month exposure is based on 5 different rate movements (flat, rising, or
declining). Three different rate scenarios were used for rising rates since
First Citizens is liability sensitive.

Interest Rate Risk
December 2000
(in thousands)

Tier
Capital                       
$45,441

Projected 12 Month Exposure

Net InterestIncome Levels
      Rate Movesin Basis Pts.
      CurrentPosition
      PossibleScenarios
      VarianceDeclining 4
      -400
      $ 19,816
      $  18,085
      ($ 1,731)Declining 3
      -300
      19,816
      19,674
      ($   141)Declining 2
      -200
      19,816
      20,835
      $ 1,019Declining 1
      -100
      19,816
      20,627
      811Most Likely-Base
      0
      19,816
      19,816
      0Rising 1
      100
      19,816
      19,323
      ($    493)Rising 2
      200
      19,816
      18,679
      ($ 1,137)Rising 3
      300
      19,816
      17,350
      ($ 2,466)Rising 4
      400
      19,816
      16,068
      ($ 3,748)




|Net InterestIncome Levels | Tier 1 Capitalat Risk | % of Net IntIncome Actual | % of Net IntIncome Policy
|------------------------- | --------------------- | ------------------------- | -------------------------
|Declining 4               | -3.81%                | -8.74%                    | 20.00%                   
|Declining 3               | -0.31%                | -0.71%                    | 20.00%                   
|Declining 2               | 2.24%                 | 5.14%                     | 20.00%                   
|Declining 1               | 1.78%                 | 4.09%                     | 10.00%                   
|Most Likely-Base          | 0.00%                 | 0.00%                     | 0.00%                    
|Rising 1                  | -1.09%                | -2.49%                    | -10.00%                  
|Rising 2                  | -2.50%                | -5.74%                    | -25.00%                  
|Rising 3                  | -5.43%                | -12.44%                   | -25.00%                  
|Rising 4                  | -8.25%                | -18.91%                   | -30.00%                  

Notes

Net interest income as presented in the preceding table
assumes that interest rates would change immediately on the total portfolio, a
scenario which would reflect a worst case position and is unlikely to happen. A
revised investment management strategy approved by the Board in 2000 will spread
the call feature on investments and borrowings over a time period sufficient to
minimize the impact of interest of rate changes to the income statement. This
will avoid a repeat of the situation which occurred in 2000, when numerous calls
were made on both investments and borrowings, significantly increasing the cost
of funds and significantly increasing the cost of funds and negatively impacting
net interest margins.

The rising rate scenarios will dilute First
Citizens net income because FCNB's liabilities reprice faster than its assets.
In a rising rate cycle, non-maturity deposits will not reprice until a 250 or
300 basis point rise takes place. In a declining rate cycle, non-maturity
deposits will reprice with market conditions until deposits hit a floor
position. A 200 basis point rise in rates would cause earnings to decrease
because liabilities would reprice quicker than rate sensitive assets.



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

|                               | O/N
  BAL | O/N
 RATE | 0-3
 MONTHS
   BAL | 0-3
 RATE | 3-12
 MONTHS 
BAL | 3-12
 RATE
|------------------------------ | --------- | --------- | ------------------ | --------- | ----------------- | ----------
|                               |           |           |                    |           |                   |           
|Assets:                        |           |           |                    |           |                   |           
|Cash and Due From              | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Cash and Due From        | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|US Treasury                    | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|US Agency                      | 0.00      | 0.00      | 6,373.73           | 5.37      | 10,691.78         | 4.99      
|MBS                            | 0.00      | 0.00      | 5,127.96           | 6.19      | 13,742.69         | 5.33      
|Agency                         | 0.00      | 0.00      | 11,501.68          | 5.73      | 24,434.47         | 5.18      
|Municipals                     | 0.00      | 0.00      | 446.69             | 5.62      | 1,462.42          | 4.82      
|Corp & Others                  | 0.00      | 0.00      | 6,665.75           | 7.09      | 0.00              | 0.00      
|Equities                       | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Unrealized G/L                 | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Investments              | 0.00      | 0.00      | 18,614.12          | 6.22      | 25,896.89         | 5.16      
|Fed Funds Sold                 | 0.00      | 0.00      | 15,886.91          | 1.50      | 0.00              | 0.00      
|Fed Funds Sold-Balance         | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Fed Funds Sold           | 0.00      | 0.00      | 15,886.91          | 1.50      | 0.00              | 0.00      
|Commercial Variable            | 0.00      | 0.00      | 14,385.81          | 5.27      | 8,923.51          | 4.52      
|Commercial Fixed               | 0.00      | 0.00      | 11,207.91          | 8.29      | 12,353.27         | 7.58      
|Contra Loans - Troy            | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Floor                          | 0.00      | 0.00      | 179.02             | 4.75      | 0.00              | 0.00      
|Unearned                       | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Commercial               | 0.00      | 0.00      | 25,772.75          | 6.58      | 21,276.78         | 6.30      
|Real Estate Variable           | 0.00      | 0.00      | 25,867.42          | 5.32      | 9,447.55          | 5.99      
|Real Estate Fixed              | 0.00      | 0.00      | 42,671.62          | 8.22      | 60,758.96         | 7.72      
|Home Equity +1                 | 0.00      | 0.00      | 8,999.17           | 4.99      | 0.00              | 0.00      
|Home Equity +2                 | 0.00      | 0.00      | 3,058.16           | 6.08      | 0.00              | 0.00      
|Home Equity                    | 0.00      | 0.00      | 12,057.33          | 5.27      | 0.00              | 0.00      
|Secondary Mortgage             | 0.00      | 0.00      | 4,021.41           | 4.75      | 0.00              | 0.00      
|Total Real Estate              | 0.00      | 0.00      | 84,617.78          | 6.75      | 70,206.51         | 7.49      
|Installment Variable           | 0.00      | 0.00      | 31.10              | 6.43      | 178.57            | 5.32      
|Installment Fixed              | 0.00      | 0.00      | 3,780.18           | 9.40      | 13,062.43         | 9.03      
|Finance Company - 78s          | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Installment              | 0.00      | 0.00      | 3,811.28           | 9.38      | 13,241.00         | 8.98      
|Credit Cards                   | 0.00      | 0.00      | 2,504.24           | 12.96     | 0.00              | 0.00      
|Overdrafts                     | 0.00      | 0.00      | 342.22             | 0.00      | 0.00              | 0.00      
|Total Other Loans              | 0.00      | 0.00      | 2,846.46           | 11.40     | 0.00              | 0.00      
|Total Loans                    | 0.00      | 0.00      | 117,048.27         | 6.91      | 104,724.29        | 7.43      
|Loan Loss Reserve              | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Net Loans                | 0.00      | 0.00      | 117,048.27         | 6.91      | 104,724.29        | 7.43      
|Building, Furniture & Fixtures | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Other Real Estate              | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Other Assets                   | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Assets                   | 0.00      | 0.00      | 151,549.30         | 6.26      | 130,621.18        | 6.98      
|                               |           |           |                    |           |                   |           
|Liabilities:                   |           |           |                    |           |                   |           
|Demand                         | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Total Demand                   | 0.00      | 0.00      | 0.00               | 0.00      | 0.00              | 0.00      
|Regular                        | 0.00      | 0.00      | 0.00               | 0.00      | 4,455.48          | 1.25      
|NOW                            | 0.00      | 0.00      | 0.00               | 0.00      | 7,704.94          | 0.70      
|Business                       | 0.00      | 0.00      | 0.00               | 0.00      | 155.44            | 0.70      
|IMF                            | 0.00      | 0.00      | 0.00               | 0.00      | 1.50              | 0.70      
|First Rate                     | 0.00      | 0.00      | 0.00               | 0.00      | 8,415.11          | 1.35      
|Wall Street                    | 46,384.41 | 1.60      | 0.00               | 0.00      | 0.00              | 0.00      
|Dogwood                        | 0.00      | 0.00      | 0.00               | 0.00      | 1,666.99          | 0.70      
|Total Savings                  | 46,384.41 | 1.60      | 0.00               | 0.00      | 22,399.45         | 1.05      
|CD 1-3 Months                  | 0.00      | 0.00      | 7,211.43           | 1.89      | 11.96             | 6.50      
|CD 3-6 Months                  | 0.00      | 0.00      | 806.43             | 2.88      | 30,500.19         | 1.75      
|CD 6-12 Months                 | 0.00      | 0.00      | 17,186.40          | 3.62      | 27,560.78         | 2.53      
|CD 13 Months                   | 0.00      | 0.00      | 3,024.12           | 5.46      | 9,192.24          | 4.17      
|CD 1-2 Years                   | 0.00      | 0.00      | 34,135.03          | 6.18      | 47,600.34         | 3.96      
|CD 2-5 Years                   | 0.00      | 0.00      | 0 00               | 0.00      | 730.76            | 5.77      
|CD 5 + Years                   | 0.00      | 0.00      | 542.09             | 6.07      | 493.10            | 6.11      
|Total CD                       | 0.00      | 0.00      | 62,905.50          | 4.91      | 116,089.38        | 3.08      



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

|                          | O/N
  BAL   | O/N
 RATE | 0-3
 MONTHS 
 BAL | 0-3
 RATE | 3-12
 MONTHS 
BAL | 3-12
 RATE
|------------------------- | ----------- | --------- | ----------------- | --------- | ----------------- | ----------
|IRA Savings               | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|IRA 1-2 Years             | 0.00        | 0.00      | 6,036.97          | 5.24      | 8,865.09          | 3.89      
|IRA 2-5 Years             | 0.00        | 0.00      | 213.64            | 5.09      | 741.06            | 5.58      
|IRA 5 + Years             | 0.00        | 0.00      | 179.97            | 5.75      | 467.89            | 6.10      
|Total IRA                 | 0.00        | 0.00      | 6,430.58          | 5.25      | 10,074.04         | 4.11      
|Christmas Club            | 0.00        | 0.00      | 143.45            | 1.25      | 0.00              | 0.00      
|Total Time                | 0.00        | 0.00      | 69,479.53         | 4.94      | 126,163.42        | 3.16      
|Total Deposits            | 46,384.41   | 1.60      | 69,479.53         | 4.94      | 148,562.86        | 2.84      
|Fed Funds Purchased - Bal | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Fed Funds Purchased       | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|TT&L                      | 796.11      | 1.54      | 0.00              | 0.00      | 0.00              | 0.00      
|Securities Sold - Sweep   | 9,751.48    | 1.31      | 0.00              | 0.00      | 0.00              | 0.00      
|Securities Sold - Fixed   | 0.00        | 0.00      | 3,870.64          | 4.06      | 4,205.22          | 3.66      
|FHLB Short Term           | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|FHLB Long Term Fixed      | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|FHLB Libor                | 0.00        | 0.00      | 1,500.00          | 1.85      | 0.00              | 0.00      
|FHLB Long Term-Callable   | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Note Payable-Finance-FCNB | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Note Payable-Finance GE   | 0.00        | 0.00      | 1,704.68          | 5.75      | 0.00              | 0.00      
|Total Borrowing           | 10,547.58   | 1.33      | 7,075.32          | 4.00      | 4,205.22          | 3.66      
|Other Liabilities         | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Total Other Liabilities   | 10,547.58   | 1.33      | 7,075.32          | 4.00      | 4,205.22          | 3.66      
|Total Liabilities         | 56,931.99   | 1.55      | 76,554.86         | 4.85      | 152,768.08        | 2.86      
|                          |             |           |                   |           |                   |           
|Equity:                   |             |           |                   |           |                   |           
|Retained Earnings         | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Stock, Surplus, PIC       | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Unrealized Gains/(Losses) | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|YTD NET INCOME            | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|Total Equity              | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|                          |             |           |                   |           |                   |           
|Total Liability/Equity    | 56,931.99   | 1.55      | 76,554.86         | 4.85      | 152,768.08        | 2.86      
|                          |             |           |                   |           |                   |           
|Period Gap                | (56,931.99) | 0.00      | 74,994.45         | 0.00      | (22,146.90)       | 0.00      
|Cumulative Gap            | (56,931.99) | 0.00      | 18,062.45         | 0.00      | (4,084.45)        | 0.00      
|RSA/RSL                   | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|                          |             |           |                   |           |                   |           
|Off Balance Sheet:        |             |           |                   |           |                   |           
|Total Off Balance Sheet   | 0.00        | 0.00      | 0.00              | 0.00      | 0.00              | 0.00      
|                          |             |           |                   |           |                   |           
|Period Gap                | (56,931.99) | 0.00      | 74,994.45         | 0.00      | (22,146.90)       | 0.00      
|Cumulative Gap            | (56,931.99) | 0.00      | 18,062.45         | 0.00      | (4,084.45)        | 0.00      
|RSA/RSL                   | 0.00        | 0.00      | 1.98              | 0.00      | 0.86              | 0.00      



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

|                               | 1-3 
  YEARS
  BAL | 1-3
   YEARS
 RATE | 3-5
  YEARS
   BAL | 3-5
  YEARS
 RATE | 5-10
  YEARS
  BAL | 5-10
  YEARS
 RATE
|------------------------------ | ------------------ | ------------------ | ------------------ | ----------------- | ------------------ | ------------------
|Assets:                        |                    |                    |                    |                   |                    |                   
|Cash and Due From              | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Cash and Due From        | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|US Treasury                    | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|US Agency                      | 5,972.84           | 5.74               | 0.00               | 0.00              | 0.00               | 0.00              
|MBS                            | 24,323.50          | 5.97               | 8,778.99           | 5.85              | 0.00               | 0.00              
|Agency                         | 30,296.34          | 5.92               | 8,778.99           | 5.85              | 0.00               | 0.00              
|Municipals                     | 3,680.60           | 3.64               | 3,045.50           | 4.23              | 8,947.77           | 4.89              
|Corp & Others                  | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Equities                       | 0.00               | 0.00               | 0.00               | 0.00              | 3,765.70           | 2.87              
|Unrealized G/L                 | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Investments              | 33,976.74          | 5.68               | 11,824.49          | 5.43              | 12,713.47          | 4.29              
|Fed Funds Sold                 | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Fed Funds Sold-Balance         | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Fed Funds Sold           | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Commercial Variable            | 0.00               | 9.50               | 0.00               | 0.00              | 0.00               | 0.00              
|Commercial Fixed               | 11,539.20          | 0.00               | 3,670.39           | 8.25              | 936.83             | 7.22              
|Contra Loans - Troy            | 0.00               | 0.00               | 454.50             | 0.00              | 0.00               | 0.00              
|Floor                          | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Unearned                       | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Commercial               | 11,539.20          | 8.40               | 4,124.89           | 7.34              | 936.83             | 7.22              
|Real Estate Variable           | 2,545.43           | 8.70               | 1,011.22           | 7.62              | 0.00               | 0.00              
|Real Estate Fixed              | 76,916.60          | 7.92               | 27,209.40          | 7.96              | 0.00               | 0.00              
|Home Equity +1                 | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Home Equity +2                 | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Home Equity                    | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Secondary Mortgage             | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Real Estate              | 79,462.02          | 7.94               | 28,220.62          | 7.95              | 0.00               | 0.00              
|Installment Variable           | 16.41              | 7.75               | 0.00               | 0.00              | 0.00               | 0.00              
|Installment Fixed              | 17,978.15          | 10.26              | 3,921.58           | 8.78              | 212.82             | 9.14              
|Finance Company - 78s          | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Installment              | 17,994.56          | 10.26              | 3,921.58           | 8.78              | 212.82             | 9.14              
|Credit Cards                   | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Overdrafts                     | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Other Loans              | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Loans                    | 108,995.78         | 8.37               | 36,267.09          | 7.97              | 1,149.65           | 7.58              
|Loan Loss Reserve              | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Net Loans                | 108,995.78         | 8.37               | 36,267.09          | 7.97              | 1,149.65           | 7.58              
|Building, Furniture & Fixtures | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Other Real Estate              | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Other Assets                   | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Assets                   | 142,972.72         | 7.73               | 48,091.58          | 7.35              | 13,863.12          | 4.56              
|                               |                    |                    |                    |                   |                    |                   
|Liabilities:                   |                    |                    |                    |                   |                    |                   
|Demand                         | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Total Demand                   | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Regular                        | 8,910.96           | 1.25               | 4,455.48           | 1.25              | 4,455.48           | 1.25              
|NOW                            | 15,409.87          | 0.70               | 7,704.94           | 0.70              | 7,704.94           | 0.70              
|Business                       | 310.87             | 0.70               | 155.44             | 0.70              | 155.44             | 0.70              
|IMF                            | 1.50               | 0.70               | 0.00               | 0.00              | 0.00               | 0.00              
|First Rate                     | 8,415.11           | 1.35               | 0.00               | 0.00              | 0.00               | 0.00              
|Wall Street                    | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|Dogwood                        | 3,333.98           | 0.70               | 1,666.99           | 0.70              | 1,666.99           | 0.70              
|Total Savings                  | 36,382.29          | 0.98               | 13,982.84          | 0.88              | 13,982.84          | 0.88              
|CD 1-3 Months                  | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|CD 3-6 Months                  | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|CD 6-12 Months                 | 0.00               | 0.00               | 0.00               | 0.00              | 0.00               | 0.00              
|CD 13 Months                   | 450.08             | 2.03               | 0.00               | 0.00              | 0.00               | 0.00              
|CD 1-2 Years                   | 12,225.79          | 4.21               | 0.00               | 0.00              | 0.00               | 0.00              
|CD 2-5 Years                   | 10,093.97          | 5.24               | 20.00              | 6.75              | 0.00               | 0.00              
|CD 5 + Years                   | 1,611.69           | 5.28               | 1,903.43           | 5.76              | 10.02              | 4.75              
|Total CD                       | 24,381.52          | 4.67               | 1,923.43           | 5.77              | 10.02              | 4.75              



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

|                                   | 1-3 
  YEARS
  BAL | 1-3
   YEARS
 RATE | 3-5
  YEARS
    BAL | 3-5
  YEARS
 RATE | 5-10
  YEARS
BAL | 5-10
  YEARS
 RATE
|---------------------------------- | ------------------ | ------------------ | ------------------- | ----------------- | ---------------- | ------------------
|IRA Savings                        | 0.00               | 0.00               | 0.00                | 0.00              | 63.17            | 1.25              
|IRA 1-2 Years                      | 2,147.84           | 3.77               | 30.03               | 5.85              | 0.00             | 0.00              
|IRA 2-5 Years                      | 1,765.15           | 4.67               | 32.93               | 4.40              | 0.00             | 0.00              
|IRA 5 + Years                      | 1,587.75           | 5.47               | 873.65              | 6.13              | 0.00             | 0.00              
|Total IRA                          | 5,500.74           | 4.55               | 936.61              | 6.06              | 63.17            | 1.25              
|Christmas Club                     | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Total Time                         | 29,882.26          | 4.65               | 2,860.04            | 5.86              | 73.19            | 1.73              
|Total Deposits                     | 66,264.55          | 2.64               | 16,842.88           | 1.72              | 14,056.03        | 0.88              
|Fed Funds Purchased - Bal          | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Fed Funds Purchased                | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|TT & L                             | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Securities Sold - Sweep            | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Securities Sold - Fixed            | 0.00               | 0.80               | 0.00                | 0.00              | 0.00             | 0.00              
|FHLB Short Term                    | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|FHLB Long Term Fixed               | 0.00               | 0.00               | 0.00                | 0.00              | 1,574.62         | 5.83              
|FHLB Libor                         | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|FHLB Long Term-Callable            | 0.00               | 0.00               | 0.00                | 0.00              | 57,500.00        | 5.37              
|Note Payable-Finance-FCNB          | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Note Payable-Finance GE            | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Total Borrowings                   | 0.00               | 0.00               | 0.00                | 0.00              | 59,074.62        | 5.38              
|Other Liabilities                  | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Total Other Liabilities            | 0.00               | 0.00               | 0.00                | 0.00              | 59,074.62        | 5.38              
|Total Liabilities                  | 66,264.55          | 2.64               | 16,842.88           | 1.72              | 73,130.65        | 4.52              
|                                   |                    |                    |                     |                   |                  |                   
|Equity:                            |                    |                    |                     |                   |                  |                   
|Retained Earnings                  | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Stock, Surplus, PIC                | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Unrealized Gains/(Losses) Mortgage | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|YTD NET INCOME                     | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|Total Equity                       | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|                                   |                    |                    |                     |                   |                  |                   
|Total Liability/Equity             | 66,264.55          | 2.64               | 16,842.88           | 1.72              | 73,130.65        | 4.52              
|                                   |                    |                    |                     |                   |                  |                   
|Period Gap                         | 76,708.17          | 0.00               | 31,248.70           | 0.00              | (59,267.53)      | 0.00              
|Cumulative Gap                     | 72,623.72          | 0.00               | 103,872.43          | 0.00              | 44,604.90        | 0.00              
|RSA/RSL                            | 2.16               | 0.00               | 2.86                | 0.00              | 0.19             | 0.00              
|                                   |                    |                    |                     |                   |                  |                   
|Off Balance Sheet:                 |                    |                    |                     |                   |                  |                   
|Total Off Balance Sheet            | 0.00               | 0.00               | 0.00                | 0.00              | 0.00             | 0.00              
|                                   |                    |                    |                     |                   |                  |                   
|Period Gap                         | 76,708.17          | 0.00               | 31,248.70           | 0.00              | (59,267.53)      | 0.00              
|Cumulative Gap                     | 72,623.72          | 0.00               | 103,872.43          | 0.00              | 44,604.90        | 0.00              
|RSA/RSL                            | 2.16               | 0.00               | 2.86                | 0.00              | 0.19             | 0.00              



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

|                               | 10-15 
  YEARS
  BAL | 10-15
   YEARS
 RATE | 15+
  YEARS
    BAL | 15+
  YEARS
 RATE | NON-
  SENSITIVE
BAL | TOTAL
  BAL
|------------------------------ | -------------------- | -------------------- | ------------------- | ----------------- | -------------------- | -----------
|Assets:                        |                      |                      |                     |                   |                      |            
|Cash and Due From              | 0.00                 | 0.00                 | 0.00                | 0.00              | 15,296.00            | 15,296.00  
|Total Cash and Due From        | 0.00                 | 0.00                 | 0.00                | 0.00              | 15,296.00            | 15,296.00  
|US Treasury                    | 0.00                 | 0.00                 | 528.47              | 0.00              | 0.00                 | 0.00       
|US Agency                      | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 23,038.35  
|MBS                            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 51,973.13  
|Agency                         | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 75,011.48  
|Municipals                     | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 17,582.98  
|Corp & Others                  | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 6,665.75   
|Equities                       | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 3,765.70   
|Unrealized G/L                 | 0.00                 | 0.00                 | 0.00                | 0.00              | 1,248.26             | 1,248.26   
|Total Investments              | 0.00                 | 0.00                 | 528.47              | 0.00              | 1,248.26             | 104,274.17 
|Fed Funds Sold                 | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 15,886.91  
|Fed Funds Sold-Balance         | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|Total Fed Funds Sold           | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 15,886.91  
|Commercial Variable            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 23,309.32  
|Commercial Fixed               | 421.59               | 8.75                 | 400.93              | 8.75              | 0.00                 | 40,530.11  
|Contra Loans - Troy            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 454.50     
|Floor                          | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 179.02     
|Unearned                       | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|Total Commercial               | 421.59               | 8.75                 | 400.93              | 8.75              | 0.00                 | 64,472.95  
|Real Estate Variable           | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 38,871.62  
|Real Estate Fixed              | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 207,556.58 
|Home Equity +1                 | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 8,999.17   
|Home Equity +2                 | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 3,058.16   
|Home Equity                    | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 12,057.33  
|Secondary Mortgage             | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 4,021.41   
|Total Real Estate              | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 262,506.93 
|Installment Variable           | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 226.09     
|Installment Fixed              | 18.32                | 10.00                | 0.00                | 0.00              | 0.00                 | 38,973.48  
|Finance Company - 78s          | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|Total Installment              | 18.32                | 10.00                | 0.00                | 0.00              | 0.00                 | 39,199.57  
|Credit Cards                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 2,504.24   
|Overdrafts                     | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 342.22     
|Total Other Loans              | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 2,846.46   
|Total Loans                    | 439.90               | 8.80                 | 400.93              | 8.75              | 0.00                 | 369,025.92 
|                               |                      |                      |                     |                   |                      |            
|Loan Loss Reserve              | 0.00                 | 0.00                 | 0.00                | 0.00              | (4,015.00)           | (4,015.00) 
|Total Net Loans                | 439.90               | 8.80                 | 400.93              | 8.75              | (4,015.00)           | 365,010.92 
|Building, Furniture & Fixtures | 0.00                 | 0.00                 | 0.00                | 0.00              | 14,571.00            | 14,571.00  
|Other Real Estate              | 0.00                 | 0.00                 | 0.00                | 0.00              | 1,730.00             | 1,730.00   
|Other Assets                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 21,222.00            | 21,222.00  
|                               |                      |                      |                     |                   |                      |            
|Total Other Assets             | 0.00                 | 0.00                 | 0.00                | 0.00              | 37,523.00            | 37,523.00  
|Total Assets                   | 439.90               | 8.80                 | 400.93              | 8.75              | 50,052.26            | 537,991.00 
|                               |                      |                      |                     |                   |                      |            
|Liabilities:                   |                      |                      |                     |                   |                      |            
|Demand                         | 0.00                 | 0.00                 | 0.00                | 0.00              | 41,917.00            | 41,917.00  
|Total Demand                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 41,917.00            | 41,917.00  
|Regular                        | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 22,277.40  
|NOW                            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 38,524.68  
|Business                       | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 777.18     
|IMF                            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 3.00       
|First Rate                     | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 16,830.22  
|Wall Street                    | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 46,384.41  
|Dogwood                        | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 8,334.94   
|Total Savings                  | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 133,131.83 
|CD 1-3 Months                  | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 7,223.39   
|CD 3-6 Months                  | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 31,306.63  
|CD 6-12 Months                 | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 44,747.18  
|CD 13 Months                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 12,666.44  
|CD 1-2 Years                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 93,961.16  
|CD 2-5 Years                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 10,844.73  
|CD 5 + Years                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 4,560.32   
|Total CD                       | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 205,309.85 



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

|                          | 10-15 
  YEARS
  BAL | 10-15
   YEARS
 RATE | 15+
  YEARS
    BAL | 15+
  YEARS
 RATE | NON-
  SENSITIVE
BAL | TOTAL
  BAL
|------------------------- | -------------------- | -------------------- | ------------------- | ----------------- | -------------------- | -----------
|IRA Savings               | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 63.17      
|IRA 1-2 Years             | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 17,079.92  
|IRA 2-5 Years             | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 2,752.78   
|IRA 5 + Years             | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 3,109.27   
|Total IRA                 | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 23,005.14  
|Christmas Club            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 143.45     
|Total Time                | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 228,458.43 
|Total Deposits            | 0.00                 | 0.00                 | 0.00                | 0.00              | 41,917.00            | 403,507.26 
|Fed Funds Purchased - Bal | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|Fed Funds Purchased       | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|TT & L                    | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 796.11     
|Securities Sold - Sweep   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 9,751.48   
|Securities Sold - Fixed   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 8,075.86   
|FHLB Short Term           | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|FHLB Long Term Fixed      | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 1,574.62   
|FHLB Libor                | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 1,500.00   
|FHLB Long Term-Callable   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 57,500.00  
|Note Payable-Finance-FCNB | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|Note Payable-Finance GE   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 1,704.68   
|Total Borrowings          | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 80,902.74  
|Other Liabilities         | 0.00                 | 0.00                 | 0.00                | 0.00              | 3,772.00             | 3,772.00   
|Total Other Liabilities   | 0.00                 | 0.00                 | 0.00                | 0.00              | 3,772.00             | 84,674.74  
|Total Liabilities         | 0.00                 | 0.00                 | 0.00                | 0.00              | 45,689.00            | 488,182.00 
|                          |                      |                      |                     |                   |                      |            
|Equity:                   |                      |                      |                     |                   |                      |            
|Retained Earnings         | 0.00                 | 0.00                 | 0.00                | 0.00              | 31,151.00            | 31,151.00  
|Stock, Surplus, PIC       | 0.00                 | 0.00                 | 0.00                | 0.00              | 18,095.00            | 18,095.00  
|Unrealized Gains/(Losses) | 0.00                 | 0.00                 | 0.00                | 0.00              | 563.00               | 563.00     
|YTD NET INCOME            | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|Total Equity              | 0.00                 | 0.00                 | 0.00                | 0.00              | 49,809.00            | 49,809.00  
|                          |                      |                      |                     |                   |                      |            
|Total Liability/Equity    | 0.00                 | 0.00                 | 0.00                | 0.00              | 95,498.00            | 537,991.00 
|                          |                      |                      |                     |                   |                      |            
|Period Gap                | 439.90               | 0.00                 | 400.93              | 0.00              | (45,445.74)          | 0.00       
|Cumulative Gap            | 45,044.80            | 0.00                 | 45,445.73           | 0.00              | (.01)                | 0.00       
|RSA/RSL                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.52                 | 0.00       
|                          |                      |                      |                     |                   |                      |            
|Off Balance Sheet:        |                      |                      |                     |                   |                      |            
|Total Off Balance Sheet   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.00                 | 0.00       
|                          |                      |                      |                     |                   |                      |            
|Period Gap                | 439.90               | 0.00                 | 400.93              | 0.00              | (45,445.74)          | 0.0        
|Cumulative Gap            | 45,044.80            | 0.00                 | 45,445.73           | 0.00              | (.01)                | 0.00       
|RSA/RSL                   | 0.00                 | 0.00                 | 0.00                | 0.00              | 0.52                 | 0.00       



CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

TOTAL
  RATEAssets:Cash and Due From
0.00Total Cash and Due From
0.00US Treasury
0.00US Agency
5.29MBS
5.80Agency
5.64Municipals
4.53Corp & Others
7.09Equities
2.87Unrealized G/L
0.00Total Investments
5.38Fed Funds Sold
1.50Fed Funds Sold-Balance
0.00Total Fed Funds Sold
1.50Commercial Variable
4.98Commercial Fixed
8.08Contra Loans - Troy
0.00Floor
4.75Unearned
0.00Total Commercial
6.90Real Estate Variable
5.76Real Estate Fixed
7.93Home Equity +1
4.99Home Equity +2
6.08Home Equity
5.27Secondary Mortgage
4.75Total Real Estate
7.44Installment Variable
5.65Installment Fixed
9.61Finance Company - 78s
0.00Total Installment
9.59Credit Cards
12.96Overdrafts
0.00Total Other Loans
11.40Total Loans
7.60Loan Loss Reserve
0.00Total Net Loans
7.68Building, Furniture & Fixtures
0.00Other Real Estate
0.00Other Assets
0.00Total Other Assets
0.00Total Assets
6.30Liabilities:Demand
0.00Total Demand
0.00Regular
1.25NOW
0.70Business
0.70IMF
0.70First Rate
1.35Wall Street
1.60Dogwood
0.70Total Savings
1.19CD 1-3 Months
1.89CD 3-6 Months
1.78CD 6-12 Months
2.95CD 13 Months
4.40CD 1-2 Years
4.80CD 2-5 Years
5.28CD 5 + Years
5.66Total CD
3.85


CONDENSED GAP REPORT
------------------------------------
CURRENT BALANCES
-----------------------------------
12/31/01
(in thousands)

TOTAL
RATEIRA Savings
1.25IRA 1-2 Years
4.35IRA 2-5 Years
4.95IRA 5 + Years
5.77Total IRA
4.61Christmas Club
1.25Total Time
3.93Total Deposits
2.62Fed Funds Purchased - Bal
0.00Fed Funds Purchased
0.00TT & L
1.54Securities Sold - Sweep
1.31Securities Sold - Fixed
3.85FHLB Short Term
0.00FHLB Long Term Fixed
5.83FHLB Libor
1.85FHLB Long Term-Callable
5.37Note Payable-Finance-FCNB
0.00Note Payable-Finance GE
5.75Total Borrowings
4.64Other Liabilities
0.00Total Other Liabilities
4.44Total Liabilities
2.93Equity:Retained Earnings
0.00Stock, Surplus, PIC
0.00Unrealized Gains/(Losses)
0.00YTD NET INCOME
0.00Total Equity
0.00Total Liability/Equity
2.66Period Gap
0.00Cumulative Gap
0.00RSA/RSL
0.00Off Balance Sheet:
0.00Total Off Balance Sheet
0.00Period Gap
0.00Cumulative Gap
0.00RSA/RSL
0.00




NOTES TO THE GAP REPORT



> Subsidiaries as well as the Parent Company
> will adhere to providing above average margins and reviewing the
> various material risks. New products and services will be reviewed for
> risk by the Product Development Committee.

1. Bancshares could benefit from a flat or declining rate
  environment. If interest rates rise rapidly, net
interest income could be adversely impacted. First Citizens'
Liquidity could be negatively impacted should interest rates drop
prompting an increase in loan demand. Adequate lines of credit are
available to handle liquidity needs should this occur.

RETURN
    ON EQUITY AND ASSETS
    FIRST CITIZENS BANCSHARES, INC.2001
2000
1999
1998
1997Percentage of Net Income to:Average Total Assets
1.10%
0.95%
1.22%
1.02%
1.26%Average Shareholders' Equity
11.91%
10.16%
13.27%
11.22%
14.15%Percentage of Dividends Declared PerCommon Share to Net Income
64.31%
81.09%
58.35%
57.51%
35.78%Percentage of Average Shareholders'Equity to Average Total Assets
9.29%
9.36%
9.24%
9.85%
9.71%


The primary functions of asset/liability management are to
assure adequate liquidity and maintain an appropriate balance between interest
sensitive earning assets and interest bearing liabilities. Liquidity management
involves the ability to meet the cash flow requirements of customers who may be
either depositors wanting to withdraw funds or borrowers needing assurance that
sufficient funds will be available to meet their credit needs. First Citizens'
liquidity position improved dramatically in year 2001, as a result of called
investments and above average deposit growth. Other sources of liquidity readily
available is a diversified based of wholesale borrowings that include federal
home loan bank, brokered certificates of deposits, federal funds purchased, and
securities sold under agreements to repurchase.

Total Capital (excluding Reserve for Loan
Losses) as a percentage of total assets is presented in the following table for
years indicated:

|CAPITAL
      RESOURCES/TOTAL ASSETS - YEAR END TOTALS
      FIRST CITIZENS BANCSHARES, INC.
|--------------------------------------------------------------------------------------------
|2001                                                                                        
|9.25%                                                                                       

First Citizens' shareholders' equity at December 31, 2001
was $48,809 thousand compared to $46,889 thousand at December 31, 2000, up
$1,920 thousand or 4.09 percent. The net increase in capital is a result of
undistributed net income, pay-down on debt incurred by the Employee Stock
Ownership Plan, and positive market moves in the bond portfolio. Bancshares has
historically maintained capital in excess of minimum levels established by the
Federal Reserve Board. The risked based capital ratio, a comparison of tier I
and tier II capital to risk weighted assets, was 14.04 percent and 13.78% at
December 31, 2001 and December 31, 2000. The capital to assets was 9.25% at
12-31-01 versus 9.35% for 12-31-00. This ratio declined slightly due to asset
growth and treasury stock purchases.Bancshares'intends to
maintain a capital to asset ratio, which reflects financial strength and
conforms to current regulatory guidelines. The ratio of dividends to net income
was 64 percent in 2001, and 81 percent in 2000 and this was above peer average.
The authorized number of common shares was 3,675,225. shares issued and
outstanding. Bancshares' declared cash dividends on its common stock of $1.00
per share in both 2001 and 2000. Dividends paid in year 2000 included a special
dividend declared fourth quarter of $.10 per share. Dividends  ratios
paid to shareholders are in line with levels targeted by the bank's capital
plan.

Risk-based capital focuses primarily on
broad categories of credit risk and incorporates elements of transfer, interest
rate and market risks. The calculation of risk-based capital ratio is
accomplished by dividing qualifying capital by weighted risk assets. The minimum
risk-based capital ratio is 8.00%. At least one-half or 4.00% must consist of
core capital (Tier 1), and the remaining 4.00% may be in the form of core (Tier
1) or supplemental capital (Tier 2). Tier 1 capital/core capital consists of
common stockholders equity, qualified perpetual preferred stock and minority
interests in consolidated subsidiaries. Tier 2 capital/supplementary capital
consists of the allowance for loan and lease losses, perpetual preferred stock,
term subordinated debt, and other debt and stock instruments.

---

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

CARMICHAEL, DUNN, CRESWELL & SPARKS PLLCCertified Public Accountants

INDEPENDENT AUDITORS' REPORT





Board of Directors
First Citizens Bancshares, Inc.
Dyersburg, Tennessee 38024

We have audited the accompanying consolidated balance sheets of First Citizens Bancshares, Inc., and its subsidiary as of December 31, 2001 and 2000, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years ended December 31, 2001. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Citizens Bancshares, Inc., and its subsidiary as of December 31, 2001 and 2000, and their results of operations and cash flows for the three years ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.







Dyersburg, Tennessee
January 25, 2002



1

---

FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARYCONSOLIDATED BALANCE SHEET 
DECEMBER 31, 2001 AND 2000

|                                                                                                               | 2001                    |  | 2000           
|-------------------------------------------------------------------------------------------------------------- | ----------------------- |  | ---------------
|                                                                                                               | (In thousands)         
|ASSETS                                                                                                        
|Cash and due from banks                                                                                        | $            15,296     |  | $        19,123
|Federal funds sold                                                                                             | 15,887                  |  | 4,804          
|Investment securities                                                                                          |                         |  |                
|Securities held-to-maturity (fair value of
$2,648 at December 31, 2001
       and $16,626 at December 31, 2000 | 2,615                   |  | 16,705         
|Securities available-for-sale, at fair
value                                                                   | 101,659                 |  | 86,389         
|Loans (net of unearned income of $1,738 in 2001 and $2,825 in 2000)                                            | 369,026                 |  | 340,959        
|Less: Allowance for loan losses                                                                                | 4,015                   |  | 3,763          
|Net Loans                                                                                                      | 365,011                 |  | 337,196        
|Premises and equipment, net                                                                                    | 14,571                  |  | 14,024         
|Accrued interest receivable                                                                                    | 3,848                   |  | 5,596          
|Intangible Assets                                                                                              | 3,636                   |  | 3,959          
|Other assets                                                                                                   | 15,468                  |  | 13,158         
|                                                                                                               |                         |  |                
|TOTAL ASSETS                                                                                                   | $        537,991        |  | $      500,954 
|                                                                                                               | ========                |  | =======        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                           
|Deposits                                                                                                       |                         |  |                
|Demand                                                                                                         | $             41,917    |  | $      39,696  
|Time                                                                                                           | 228,459                 |  | 211,311        
|Savings                                                                                                        | 133,132                 |  | 133,132        
|Total Deposits                                                                                                 | 403,508                 |  | 371,854        
|Securities sold under agreements to repurchase                                                                 | 17,827                  |  | 15,674         
|Long term debt                                                                                                 | 63,075                  |  | 43,429         
|Federal funds purchased & other short-term borrowings                                                          | --                      |  | 18,500         
|Note payable of Employee Stock Ownership Plan                                                                  | --                      |  | 808            
|Other liabilities                                                                                              | 3,772                   |  | 3,800          
|                                                                                                               |                         |  |                
|TOTAL LIABILITIES                                                                                              | $              488,182  |  | $       454,065
|                                                                                                               |                         |  |                
|Stockholders' Equity                                                                                           |                         |  |                
|Common stock, No par value:                                                                                    |                         |  |                
|Shares
authorized - 10,000,000; issued - 3,717,593 in 2001 and 2000                                            | 3,718                   |  | 3,718          
|Surplus                                                                                                        | 15,298                  |  | 15,302         
|Retained earnings                                                                                              | 31,151                  |  | 29,095         
|Accumulated other comprehensive income                                                                         | 563                     |  | (371)          
|Less treasury stock, at cost - 42,368 shares in 2001 and 2,382
shares in 2000                                  | (921)                   |  | (47)           
|Obligation of Employee Stock Ownership Plan                                                                    | --                      |  | (808)          
|TOTAL STOCKHOLDERS' EQUITY                                                                                     | $ 49,809                |  | $        46,889
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                     | $               537,991 |  | $      500,954 
|                                                                                                               | ==========              |  | ========       

See accompanying notes to consolidated
financial statements.
-1-

---

FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2001, 2000, and 1999

|                                                          | 2001        |  | 2000       |  | 1999     
|--------------------------------------------------------- | ----------- |  | ---------- |  | ---------
|Interest Income                                           |             |  |            |  |          
|Interest and fees on loans                                | $    33,147 |  | $   31,631 |  | $  29,382
|Interest and dividends on investment securities:          |             |  |            |  |          
|Taxable                                                   | 4,640       |  | 5,496      |  | 5,582    
|Tax-exempt                                                | 686         |  | 633        |  | 610      
|Dividends                                                 | 282         |  | 236        |  | 321      
|Other interest income                                     | 434         |  | 141        |  | 190      
|Total Interest Income                                     | 39,189      |  | 38,137     |  | 36,085   
|                                                          |             |  |            |  |          
|Interest Expense                                          |             |  |            |  |          
|Interest on deposits                                      | 15,305      |  | 15,664     |  | 13,586   
|Interest on long-term debt                                | 3,184       |  | 2,435      |  | 672      
|Other interest expense                                    | 783         |  | 1,444      |  | 2,522    
|Total Interest Expense                                    | 19,272      |  | 19,543     |  | 16,780   
|Net interest income                                       | 19,917      |  | 18,594     |  | 19,305   
|Provision for loan losses                                 | 1,644       |  | 1,411      |  | 720      
|Net interest income after provision for loan
      losses | 18,273      |  | 17,183     |  | 18,585   
|                                                          |             |  |            |  |          
|Other Income                                              |             |  |            |  |          
|Income from fiduciary activities                          | 779         |  | 883        |  | 921      
|Service charges on deposit accounts                       | 3,214       |  | 2,711      |  | 2,408    
|Brokerage fees                                            | 760         |  | 950        |  | 498      
|Securities gains (losses) - net                           | 127         |  | (20)       |  | 93       
|Other income                                              | 1,515       |  | 1,548      |  | 1,751    
|Total Other Income                                        | 6,395       |  | 6,072      |  | 5,671    
|                                                          |             |  |            |  |          
|Other Expenses                                            |             |  |            |  |          
|Salaries and employee benefits                            | 8,912       |  | 8,751      |  | 8,672    
|Net occupancy expense                                     | 1,031       |  | 1,058      |  | 1,028    
|Depreciation                                              | 1,388       |  | 1,431      |  | 1,262    
|Data processing expense                                   | 532         |  | 449        |  | 436      
|Legal and professional fees                               | 166         |  | 98         |  | 139      
|Stationary and office supplies                            | 233         |  | 229        |  | 291      
|Amortization of intangibles                               | 322         |  | 320        |  | 351      
|Executive payments                                        | --          |  | 809        |  | --       
|Other expenses                                            | 4,121       |  | 3,501      |  | 3,230    
|Total Other Expenses                                      | 16,705      |  | 16,646     |  | 15,409   
|Net income before income taxes                            | $  7,963    |  | $  6,609   |  | $  8,847 
|Provision for income tax expense                          | 2,202       |  | 1,997      |  | 3,048    
|Net income                                                | $   5,761   |  | $   4,612  |  | $   5,799
|                                                          | =====       |  | =====      |  | =====    
|Earnings Per Common Share:                                |             |  |            |  |          
|Net income                                                | $ 1.56      |  | $ 1.24     |  | $ 1.58   
|                                                          | =====       |  | =====      |  | =====    
|Weighted average shares outstanding                       | 3,703       |  | 3,709      |  | 3,664    
|                                                          | =====       |  | =====      |  | =====    

See accompanying notes to consolidated financial statements.

-2-

---

FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARYCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31, 2001, 2000, and 1999



|                                                                                                                        | 2001               |  | 2000                    |  | 1999              
|----------------------------------------------------------------------------------------------------------------------- | ------------------ |  | ----------------------- |  | ------------------
|                                                                                                                        | (In thousands)    
|Net income for year                                                                                                     | $    5,761         |  | $   4,612               |  | $  5,799          
|                                                                                                                        |                    |  |                         |  |                   
|Other comprehensive income, net of tax                                                                                  |                    |  |                         |  |                   
|Unrealized gains (losses)
      on available-for-sale securities:                                                       |                    |  |                         |  |                   
|Unrealized gains (losses)
      arising during the period                                                               | 934                |  | 1,665                   |  | (2,491)           
|Total Comprehensive Income                                                                                              | $    6,695         |  | $   6,277               |  | $  3,308          
|                                                                                                                        | =====              |  | =====                   |  | =====             
|Required disclosures of related tax effects
      allocated to each
           component of other comprehensive income: |                    |  |                         |  |                   
|                                                                                                                        | Before-taxAmount   |  | Tax (Expense)or Benefit |  | Net of taxAmount  
|Year Ended December 31, 2001                                                                                            |                    |  |                         |  |                   
|                                                                                                                        |                    |  |                         |  |                   
|Unrealized gains (losses) on available-for-sale securities:                                                             |                    |  |                         |  |                   
|Unrealized gains (losses) arising during the
      period                                                               | $    1,345         |  | $    (528)              |  | $    807          
|Less reclassification adjustments for gains
      included in 
               net income                                | 212                |  | (85)                    |  | 127               
|Net
      Unrealized Gains (Losses)                                                                                     | $    1,557         |  | $    (623)              |  | $    934          
|                                                                                                                        | =====              |  | =====                   |  | =====             
|Year Ended December 31, 2000                                                                                            |                    |  |                         |  |                   
|                                                                                                                        |                    |  |                         |  |                   
|Unrealized gains (losses) on available-for-sale securities:                                                             |                    |  |                         |  |                   
|Unrealized gains (losses) arising during the
      period                                                               | $    2,772         |  | $   
      (1,109)      |  | $    1,663        
|Less reclassification adjustments for gains
      included in 
               net income                                | 3                  |  | (1)                     |  | 2                 
|Net
      Unrealized Gains (Losses)                                                                                     | $    2,775         |  | $   
      (1,110)      |  | $    1,665        
|                                                                                                                        | =====              |  | =====                   |  | =====             
|Year Ended December 31, 1999                                                                                            |                    |  |                         |  |                   
|                                                                                                                        |                    |  |                         |  |                   
|Unrealized gains (losses) on available-for-sale securities:                                                             |                    |  |                         |  |                   
|Unrealized gains (losses) arising during the
      period                                                               | $   
      (3,912) |  | $   1,555               |  | $    (2,357)      
|Less reclassification adjustments for gains
      included in 
               net income                                | (223)              |  | 89                      |  | (134)             
|Net
      Unrealized Gains (Losses)                                                                                     | $   
      (4,135) |  | $   
      1,644        |  | $   
      (2,491)
|                                                                                                                        | =====              |  | =====                   |  | =====             

See accompanying notes to consolidated financial statements.

-3-

---

FIRST CITIZENS BANCSHARES, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2001, 2000 and 1999
(In thousands except per share data)

|                                                                                                                                                                      | Common StockShares        At Par | Surplus   | RetainedEarnings | Accumulated
    Other
  ComprehensiveIncome | TreasuryStock   | Obligation of Employee Stock Ownership Plan | Total
  
  Stockholders'
  Equity
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | --------- | ---------------- | ------------------------------------------- | --------------- | ------------------------------------------- | ---------------------------------
|Balance at January 1,
    1999                                                                                                                                        | 3,690                            | $  3,690  | $    14,591      | $ 25,883                                    | $      
    455 | $  (129)                                    | $  (1,408)                       
|Net income, year ended December 31,
    1999                                                                                                                          |                                  |           |                  | 5,799                                       |                 |                                             |                                  
|Adjustment of unrealized gain (loss)
    on securities
           available-for-sale, net of applicable
    deferred
           income taxes ($1,644) during the year |                                  |           |                  |                                             | (2,491)         |                                             |                                  
|Cash dividends paid - $0.90 per share                                                                                                                                 |                                  |           |                  | (3,384)                                     |                 |                                             |                                  
|Sale of common stock                                                                                                                                                  | 15                               | 15        | 435              |                                             |                 |                                             |                                  
|Treasury stock transactions - net                                                                                                                                     |                                  |           | 8                |                                             |                 | (75)                                        |                                  
|Principal payments - ESOP                                                                                                                                             | --                               | --        | --               | --                                          | --              | --                                          | 291                              
|Balance, December 31, 1999                                                                                                                                            | 3,705                            | 3,705     | 15,034           | 28,298                                      | (2,036)         | (204)                                       | (1,117)                          
|                                                                                                                                                                      |                                  |           |                  |                                             |                 |                                             |                                  
|Net income, year ended December 31,
    2000                                                                                                                          |                                  |           |                  | 4,612                                       |                 |                                             |                                  
|Adjustment of unrealized gain (loss)
    on securities
           available-for-sale, net of applicable
    deferred
           income taxes ($1,110) during the year |                                  |           |                  |                                             | 1,753           |                                             |                                  
|Cash dividends paid - $1.00 per share                                                                                                                                 |                                  |           |                  | (3,741)                                     |                 |                                             |                                  
|Sale of common stock                                                                                                                                                  | 13                               | 13        | 287              |                                             |                 |                                             |                                  
|Treasury stock transactions - net                                                                                                                                     |                                  |           | (19)             |                                             |                 | 157                                         |                                  
|Principal payments - ESOP                                                                                                                                             |                                  |           |                  |                                             |                 |                                             | 309                              
|Unrealized loss - derivatives                                                                                                                                         |                                  |           |                  |                                             | (88)            |                                             |                                  
|Prior period adjustment of unearned
    interest, 
          net of tax                                                                                               | --                               | --        | --               | (74)                                        | --              | --                                          | --                               
|Balance, December 31, 2000                                                                                                                                            | 3,718                            | 3,718     | 15,302           | 29,095                                      | (371)           | (47)                                        | (808)                            
|                                                                                                                                                                      |                                  |           |                  |                                             |                 |                                             |                                  
|Net income, year ended December 31,
    2001                                                                                                                          |                                  |           |                  | 5,761                                       |                 |                                             |                                  
|Adjustment of unrealized gain (loss)
    on securities
           available-for-sale, net of applicable
    deferred
           income taxes ($623) during the year   |                                  |           |                  |                                             | 934             |                                             |                                  
|Cash dividends paid - $1.00 per share                                                                                                                                 |                                  |           |                  | (3,705)                                     |                 |                                             |                                  
|Treasury stock transactions - net                                                                                                                                     |                                  |           | (4)              |                                             |                 | (874)                                       |                                  
|Principal payments - ESOP                                                                                                                                             | --                               | --        | --               | --                                          | --              | --                                          | 808                              
|Balance, December 31, 2001                                                                                                                                            | 3,718                            | $   3,718 | $   15,298       | $  31,151                                   | $      
    563 | $    (921)                                  | $       
    --                  
|                                                                                                                                                                      | ======                           | ======    | =======          | ======                                      | =======         | ======                                      | =======                          

See accompanying notes to consolidated financial statements.

-4-

---

FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARYCONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31, 2001, 2000 and 1999

|                                                                                      | 2001           |  | 2000        |  | 1999       
|------------------------------------------------------------------------------------- | -------------- |  | ----------- |  | -----------
|                                                                                      | (In thousands)
|Operating Activities                                                                  |                |  |             |  |            
|Net income                                                                            | $     5,761    |  | $     4,612 |  | $     5,799
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                |  |             |  |            
|Provisions for
loan losses                                                            | 1,644          |  | 1,411       |  | 720        
|Provision for
depreciation                                                            | 1,388          |  | 1,431       |  | 1,262      
|Provision for
amortization - intangibles                                              | 322            |  | 320         |  | 351        
|Deferred income
taxes                                                                 | 49             |  | 921         |  | (1,032)    
|Realized
investment security (gains) losses                                           | (127)          |  | 20          |  | (93)       
|Decrease
(increase) in accrued interest receivable                                    | 1,748          |  | (243)       |  | (158)      
|Increase
(decrease) in accrued interest payable                                       | (613)          |  | 480         |  | (365)      
|Increase in
other assets                                                              | (2,358)        |  | (2,738)     |  | (2,192)    
|Increase
(decrease) in other liabilities                                              | 585            |  | (380)       |  | 694        
|Net cash provided by operating activities                                             | 8,399          |  | 5,834       |  | 4,986      
|Investing Activities                                                                  |                |  |             |  |            
|Proceeds of maturities of held to maturity investment
securities                      | 14,090         |  | 3,640       |  | 7,866      
|Purchases of held-to-maturity investment securities                                   | --             |  | --          |  | (2,500)    
|Proceeds of sales and maturities of available-for-sale 
     investment securities    | 92,763         |  | 7,213       |  | 15,800     
|Purchases of available-for-sale investment securities                                 | (106,972)      |  | (13,165)    |  | (12,971)   
|Increase in loans - net                                                               | (29,459)       |  | (16,948)    |  | (18,920)   
|Purchase of premises and equipment                                                    | (1,935)        |  | (2,038)     |  | (3,451)    
|Net Cash provided by investing activities                                             | (31,513)       |  | (21,298)    |  | (14,176)   
|Financing Activities                                                                  |                |  |             |  |            
|Net increase (decrease) in demand deposits, NOW accounts,
      and  savings accounts | 14,506         |  | 3,559       |  | (4,765)    
|Increase in time deposits - net                                                       | 17,148         |  | 1,476       |  | 10,885     
|Increase in long-term borrowing                                                       | 19,646         |  | 32,165      |  |            
|Payment of principal on long-term debt                                                |                |  |             |  | (14,222)   
|Proceeds from Sale of Common Stock                                                    |                |  | 300         |  | 450        
|Cash Dividends Paid                                                                   | (3,705)        |  | (3,741)     |  | (3,384)    
|Net Increase (decrease) in short-term borrowings                                      | (16,347)       |  | (11,916)    |  | 7,983      
|Treasury stock transactions - net                                                     | (878)          |  | 138         |  | (67)       
|Net Cash provided (used) by Financing Activities                                      | 30,370         |  | 21,981      |  | (3,120)    
|                                                                                      |                |  |             |  |            
|Increase (Decrease) in Cash and Cash Equivalents                                      | 7,256          |  | 6,517       |  | (12,310)   
|                                                                                      |                |  |             |  |            
|Cash and cash equivalents at beginning of year                                        | 23,927         |  | 17,410      |  | 29,720     
|Cash and cash equivalents at end of year                                              | $   31,183     |  | $  23,927   |  | $  17,410  
|                                                                                      | ======         |  | ======      |  | ======     

Cash payments made for interest and income taxes
during the years presented are as follows:

|             | 2001      | 2000     | 1999     
|------------ | --------- | -------- | ---------
|Interest     | $  19,259 | $ 19,063 | $  17,145
|Income Taxes | 1,751     | 2,337    | 2,400    
|             |           |          |          

See accompanying notes to consolidated financial statements.
-5-

---

FIRST CITIZENS BANCSHARES, INC.,
AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND
REPORTING POLICIES

The accounting and reporting policies of First Citizens Bancshares, Inc., and Subsidiary conform to generally accepted accounting principles. The significant policies are described as follows:

BASIS OF PRESENTATION

The consolidated financial statements include all accounts of First Citizens Bancshares, Inc., and its subsidiary First Citizens National Bank. First Citizens National Bank also has three wholly-owned subsidiaries, First Citizens Financial Plus, Delta Finance Company and Nevada Investments I, Inc. which are consolidated into its financial statements. First Citizens Bancshares, Inc.'s investment in this subsidiary is reflected on the Parent Company balance sheet (Note 13) at the equity in the underlying assets.

Bank of Troy was acquired on March 5, 1999, in a transaction accounted for as a purchase, and therefore, operations of Bank of Troy from March 5, 1999 forward are included in the consolidated financial statements.

Effective January 1, 1999, First Citizens Bancshares, Inc. acquired First Volunteer Corporation and its subsidiary, First Volunteer Bank, in a transaction accounted for as a pooling-of-interests.

During the year ended December 31, 1999, Bank of Troy and First Volunteer Bank were merged with First Citizens National Bank resulting in one wholly-owned subsidiary of First Citizens Bancshares, Inc., operating as First Citizens National Bank.

During the year ended December 31, 2000, First Citizens National Bank organized, as a wholly-owned subsidiary, Nevada Investments I, Inc., a Nevada corporation. Subsequently, Nevada Investments II, Inc. was organized in the State of Nevada as a wholly-owned subsidiary of Nevada Investments I, Inc. First Citizens National Bank contributed all of its securities investments to these Nevada corporations as contributed capital, and at year end, Nevada Investments II, Inc. owns all of the securities investments reflected on the consolidated balance sheet.

All significant inter-company accounts are eliminated in consolidation.

NATURE OF OPERATIONS

The Company and its subsidiary provide commercial banking services of a wide variety to individuals and corporate customers in the mid-southern United States with a concentration in northwest Tennessee. The Company's primary products are checking and savings deposits and residential, commercial, and consumer lending.

BASIS OF ACCOUNTING

The consolidated financial statements are presented using the accrual basis of accounting.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for losses on loans and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for losses on loans and foreclosed real estate, management obtains independent appraisals for significant properties.

CASH EQUIVALENTS

Cash equivalents include amounts due from banks which do not bear interest and federal funds sold. Generally, federal funds are purchased and sold for one-day periods.

SECURITIES

Investment securities are classified as follows:

Held-to-maturity, which includes those investment securities which the Company has the intent and the ability to hold until maturity;

Trading securities, which includes those investment securities which are held for short-term resale; and

Available-for-sale, which includes all other investment securities.

Securities, which are held-to-maturity, are reflected at cost, adjusted for amortization of premiums and accretion of discounts using methods which approximate the interest method. Securities, which are available-for-sale, are carried at fair value, and unrealized gains and losses are recognized as direct increases or decreases in stockholders' equity. Trading securities, where applicable, are carried at fair value, and unrealized gains and losses on these securities are included in net income.

Realized gains and losses on investment securities transactions are determined based on the specific identification method and are included in net income.

LOANS

Loans are reflected on the balance sheet at the unpaid principal amount less the allowance for loan losses and unearned income.

Loans are generally placed on non-accrual status when, in the judgment of management, the loans have become impaired. Unpaid interest on loans placed on non-accrual status is reversed from income and further accruals of income are not usually recognized. Subsequent collections related to impaired loans are usually credited first to principal and then to previously uncollected interest.

ALLOWANCE FOR LOAN LOSSES

The provision for loan losses which is charged to operations is based on management's assessment of the quality of the loan portfolio, current economic conditions, and other relevant factors. In management's judgment, the provision for loan losses will maintain the allowance for loan losses at an adequate level to absorb probable loan losses, which may exist in the portfolio.

PREMISES AND EQUIPMENT

Bank premises and equipment are stated at cost less accumulated depreciation. The provision for depreciation is computed using straight-line and accelerated methods for both financial reporting and income tax purposes. Expenditures for maintenance and repairs are charged against income as incurred. Cost of major additions and improvements are capitalized and depreciated over their estimated useful lives.

REAL ESTATE ACQUIRED BY FORECLOSURE

Real estate acquired through foreclosure is reflected in other assets and is recorded at the lower of fair value less estimated costs to sell or cost. Adjustments made at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred in connection with ownership, subsequent adjustments to book value, and gains and losses upon disposition are included in other non-interest expenses.

Adjustments to net realizable value are made annually subsequent to acquisition based on appraisal.

INCOME TAXES

First Citizens Bancshares, Inc. uses the accrual method of
accounting for federal income tax reporting. Deferred tax assets or liabilities
are computed for significant differences in financial statement and tax bases of
assets and liabilities, which result from temporary differences in financial
statement and tax accounting.

INTEREST INCOME ON LOANS

Interest income on commercial and real estate loans is
computed on the basis of daily principal balance outstanding using the accrual
method. Interest on installment loans is credited to operations by the
level-yield method.

NET INCOME PER SHARE OF COMMON STOCK

Net income per share of common stock is computed by dividing
net income by the weighted average number of shares of common stock outstanding
during the period, after giving retroactive effect to stock dividends and stock
splits.

INCOME FROM FIDUCIARY ACTIVITIES

Income from fiduciary activities is recorded on the accrual
basis.

ADVERTISING AND PROMOTIONS

The Company's policy is to charge advertising and promotions
to expense as incurred.



NOTE 2 - INVESTMENT
SECURITIES

The following tables reflect amortized cost, unrealized gains,
unrealized losses, and fair value of investment securities for the balance sheet
dates presented, segregated into held-to-maturity and available-for-sale
categories:

|HELD-TO-MATURITY                                                                            
|--------------------------------------------------------------------------------------------
|December 31, 2001                                                                           
|(in thousands)                                                                              
|                                                                                            
|U.S. Treasury securities and
obligations of U.S.
       government corporations and agencies
|                                                                                            
|Obligations of states and political
subdivisions                                            
|Total
Securities Investments                                                                
|                                                                                            



|AVAILABLE-FOR-SALE                                                                          
|--------------------------------------------------------------------------------------------
|December 31, 2001                                                                           
|(in thousands)                                                                              
|                                                                                            
|U.S. Treasury securities and
obligations of U.S.
       government corporations and agencies
|Obligations of states and political
subdivisions                                            
|Mortgage-backed securities                                                                  
|Corporate debt securities                                                                   
|Total
Securities Investments                                                                
|Corporate debt securities                                                                   
|Total
Securities Investments                                                                
|                                                                                            



|HELD- TO- MATURITY                                                                          
|--------------------------------------------------------------------------------------------
|December 31, 2000                                                                           
|(in thousands)                                                                              
|                                                                                            
|U.S. Treasury securities and
obligations of U.S.
       government corporations and agencies
|Obligations of states and political
subdivisions                                            
|Mortgage-backed securities                                                                  
|Total
Securities Investments                                                                
|                                                                                            



|AVAILABLE-FOR-SALE                                                                          
|--------------------------------------------------------------------------------------------
|December 31, 2000                                                                           
|(in thousands)                                                                              
|                                                                                            
|U.S. Treasury securities and
obligations of U.S.
       government corporations and agencies
|Obligations of states and political
subdivisions                                            
|Mortgage-backed securities                                                                  
|Corporate debt securities                                                                   
|Total
Securities Investments                                                                
|Corporate debt securities                                                                   
|Total
Securities Investments                                                                
|                                                                                            

The tables below
summarize maturities of debt securities held-to-maturity and available-for-sale
as of December 31, 2001 and 2000:

|December 31, 2001                 
|----------------------------------
|(in thousands)                    
|                                  
|                                  
|Amounts Maturing In:              
|One Year or less                  
|After one year through
five years 
|After five years through
ten years
|After ten years                   
|                                  
|                                  



|December 31, 2000                 
|----------------------------------
|(in thousands)                    
|                                  
|                                  
|Amounts Maturing In:              
|One Year or less                  
|After one year through
five years 
|After five years through
ten years
|After ten years                   
|                                  
|                                  



|Securities gains (losses) presented in the consolidated
statements of income consist of the following:
|------------------------------------------------------------------------------------------------------
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      

Sales of securities classified as held-to-maturity consist of
securities which were called resulting in a gain or loss or sold within ninety
days of maturity. During the year 2000, First Citizens Bancshares, Inc. adopted
Statement No. 133 of the Financial Accounting Standards Board which provided a
period of time subsequent to adoption during which securities could be
transferred from held-to-maturity to available-for-sale. Securities with a book
value of $1,340,000 were transferred to the available-for-sale category and sold
at a later time in the year.

December 31
      Amortized
        Cost
      Fair Value2001
      $
        75,346
      $
        76,3832000
      79,517
      79,435


At December 31, 2001, Nevada Investments II, Inc., has unrealized gains on securities available-for-sale totaling $1,248,256, resulting in accumulated other comprehensive income in the amount of $751,025.

Generally accepted accounting principles has established accounting and reporting standards for derivative financial instruments, including certain derivative instruments embedded in other contracts and for hedging activities. These standards require that derivatives be reported either as assets or liabilities on the balance sheets and be reflected at fair value. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation. The company utilized the derivative as a cash flow hedge, hedging the "benchmark interest rate." A Federal Home Loan Bank Variable Libor Borrowing has been designated as hedged and in doing so, the Company has effectively fixed the cost of this liability.

Nevada Investments II, Inc., swapped a fixed investment cash flow for a variable cash flow that fluctuates with the Libor rate. The new variable investment is then matched with a variable borrowing cash flow generating a positive interest rate spread of 250 basis points. The purpose of this transaction was to increase the Company's earnings, and the amount of the asset involved and the risk associated with this transaction is within the Company's Funds Management Policy. The hedge matures in ten (10) years.

During the year, the value of the derivative decreased by $100,000 due to market interest rate fluctuations, resulting in a negative other comprehensive income attributable to derivatives of $188,000, which is reflected in accumulated other comprehensive income at December 31, 2001.

NOTE 3 - LOANS

Loans outstanding at December 31, 2001
and 2000, were comprised of the following:

2001
      2000(In thousands)Commercial, financial and agricultural
      $   64,496
      $   63,703Real estate - construction
      36,862
      34,195Real estate - mortgage
      225,743
      197,040Installment
      39,200
      42,754Other loans
      2,725
      3,267369,026
      340,959Less: Allowance for loan losses
      4,015
      3,763Net Loans
      $ 365,011
      $ 337,196======
      ======


In conformity with Statement No. 114 of the Financial
Accounting Standards Board, the Corporation has recognized loans with carrying
values of $1,600,000 at December 31, 2001, and $2,267,000 at December 31, 2000, as
being impaired. The balance maintained in the Allowance for Loan Losses related
to these loans was $694,700 at December 31, 2001, and $1,021,167 at December 31,
2000. As of December 31, 2001, loans
totaling $1,728,262 were directly related to the specific Allowance for Loan
Losses.

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses during the three
years ended December 31 is as follows:

2001
    2000
    1999(In thousands)Balance - beginning of
      period
    $  3,763
    $  3,718
    $  3,872Provision for loan
      losses charged to operations
    1,644
    1,411
    720Loans charged to
      allowance, net of loan loss
          recoveries of $625,398; $335,139, and $308,669
    (1,392)
    (1,366)
    (874)Balance - end of period
    $ 
      4,015
    $ 
      3,763
    $  3,718======
    ======
    ======


For tax purposes, the
Corporation deducts the maximum amount allowable. During the year ended December
31, 2001, the deduction taken was $1,455,272. The deductions for tax purposes in
2000 and 1999 were $1,820,429 and $681,563, respectively.

NOTE 5 - PREMISES AND
EQUIPMENT

The fixed assets used in the
ordinary course of business are summarized as follows:

Useful Lives
      2001
      2000(In
        thousands)Land
      
      $  
        2,193
      $  
        1,684Buildings
      5 to 50
      14,330
      13,659Furniture and
        equipment
      3 to 20
      11,320
      10,81927,843
      26,162Less:
        Accumulated depreciation
      13,272
      12,138Net Fixed Assets
      
      $ 14,571
      $ 14,024=======
      =======




NOTE 6 - REPOSSESSED
REAL PROPERTY

The carrying value of repossessed real property on the balance sheets of the Corporation is $1,757,392 at December 31, 2001, and $324,238 at December 31, 2000. The value of repossessed real property is reflected on the balance sheets in "other assets."

NOTE 7 - DEPOSITS

Included in the deposits shown on the balance sheets are the following time deposits and savings deposits in denominations of $100,000 or more:

2001
      2000(In thousands)Time Deposits
      $   96,023
      $   73,101Savings Deposits
      69,712
      49,365


NOW accounts, included in savings deposits on the balance sheets, totaled $38,524,682 at December 31, 2001, and $40,646,326 at December 31, 2000.

First Citizens National Bank routinely enters into deposit relationships with its directors, officers, and employees in the normal course of business. These deposits bear the same terms and conditions as those prevailing at the time for comparable transactions with unrelated parties. Balances of executive officers and directors on deposit as of December 31, 2001 and 2000, were $7,094,407 and $8,858,253, respectively.

Time deposits maturing in years subsequent to December 31, 2001, are as follows:

(In thousands)One year or less
$ 195,643After one year through three years
29,883After three years through five years
2,860After five years
73Total
$  228,459=======


NOTE 8 - EMPLOYEE STOCK OWNERSHIP PLAN

First Citizens National Bank maintains the First Citizens National Bank of Dyersburg Employee Stock Ownership Plan and the First Citizens National Bank 401(k) Plan as employee benefits. The 401(k) plan was adopted October 1, 2000. The plans provides for a contribution annually not to exceed twenty-five percent of the total compensation of all participants and affords eligibility for participation to all full-time employees who have completed at least one year of service. During the year 2001, the Company contributed amounts equal to three percent (3%) of total eligible compensation to the 401(k) plan and seven percent (7%) of eligible compensation to the employee stock ownership plan. Contributions to the plans totaled $619,964 in 2001, $629,820 in 2000, and $610,718 in 1999.

NOTE 9 - INCOME TAXES

Provision for income taxes is comprised of the following:

2001
    2000
    1999(In thousands)Federal income tax
      expense (benefit)Current
    $  2,075
    $  1,555
    $  2,530Deferred
    (3)
    210
    (26)State income tax
      expense (benefit)Current
    131
    193
    511Deferred
    (1)
    39
    33$  2,202
    $  1,997
    $  3,048======
    =====
    ======


The ratio of applicable income taxes to net income before income taxes differed from the statutory rates of 34%. The reasons for these differences are as follows:

2001
    2000
    1999(In thousands)Tax expense at
      statutory rate
    $  2,707
    $  2,247
    $  3,008Increase (decrease)
      resulting from:State income taxes, net of federal income tax benefit
    79
    152
    359Tax exempt income
    (245)
    (215)
    (435)Effect of life
      insurance
    (144)
    (115)
    (168)Amortization of
      goodwill
    123
    123
    124Dividends - Employee
      Stock Ownership Plan
    (296)Other items
    (22)
    (195)
    160$  2,202
    $  1,997
    $  3,048======
    ======
    ======


Deferred tax liabilities have been provided for taxable temporary differences related to depreciation, accretion of securities discounts, and other minor items. Deferred tax assets have been provided for deductible temporary differences related primarily to the allowance for loan losses and adjustments for loss on repossessed real estate. The net deferred tax assets, which are included in "other assets" in the accompanying consolidated balance sheets, include the following components:

2001
      2000(In thousands)Deferred tax liabilities
      $   (497)
      $       --Deferred tax assets
      387
      435Net deferred tax assets
      $  (110)
      $   435======
      =====


NOTE 10 - REGULATORY MATTERS

First Citizens Bancshares, Inc., is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company and the consolidated financial statements. The regulations require the Bank to meet specific capital adequacy guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier I capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of Tier I and total risk-based capital (as defined) to risk-weighted assets (as defined). To be considered adequately capitalized (as defined) under the regulatory framework for prompt corrective action, the Bank must maintain minimum Tier I leverage, Tier I risk-based, and total risk-based ratios as set forth in the table. The Bank's actual capital amounts and ratios are also presented in the table.

As of December 31, 2001, the most recent notification from the Bank's primary regulatory authorities categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution's category.

Actual
    For CapitalAdequacy Purposes
    To
      Be Well Capitalized
      Under Prompt CorrectiveAction ProvisionsAmount
    Ratio
    Amount
    Ratio
    Amount
    RatioAs of December 31, 2001:
  Total risk-based capital (to risk weighted
      assets)
    $  49,656
    14.04%

    $  28,294
    >   
      8.0%
    $  35,367
    >  10.0%Tier 1 capital (to risk
      weighted assets)
    45,610
    12.90%

    14,147
    >   
      4.0%
    21,220
    >   
      6.0%Tier 1 capital (to
      average assets)
    45,610
    8.63%

    21,135
    >4.0%
    26,418
    >5.0%As of December 31, 2000:Total risk-based capital (to risk weighted
      assets)
    $  46,657
    13.78%

    $  27,091
    >   
      8.0%
    $  33,864
    >  10.0%Tier 1 capital (to risk
      weighted assets)
    42,894
    12.67%

    13,546
    >   
      4.0%
    20,319
    >   
      6.0%Tier 1 capital (to
      average assets)
    42,894
    8.76%

    19,594
    >   
      4.0%
    24,492
    >   
      5.0%


NOTE 11 - RESTRICTIONS ON
CASH AND DUE FROM BANK ACCOUNTS

The Corporation's bank
subsidiary maintains cash reserve balances as required by the Federal Reserve
Bank. Average required balances during 2001 and 2000 were $5,023,000 and
$2,704,970, respectively.

NOTE 12 - RESTRICTIONS ON
CAPITAL AND PAYMENTS OF DIVIDENDS

The Corporation is subject to capital adequacy requirements
imposed by the Federal Reserve Bank. In addition, the Corporation's National
Bank Subsidiary is restricted by the Office of the Comptroller of the Currency
from paying dividends in any years which exceeded the net earnings of the current year plus retained profits of the preceding two
years. As of December 31, 2001, approximately $9 million of retained earnings
was available for future dividends from the subsidiary to the parent corporation.

NOTE 13 - CONDENSED FINANCIAL
INFORMATION

FIRST CITIZENS BANCSHARES, INC.
(Parent Company Only)

2001
2000(In thousands)BALANCE SHEETSASSETSCash
$        148
$      1,091Investment in subsidiaries
49,588
46,482Other assets
15,468
124TOTAL ASSETS
$    49,811
$    47,697========
=======LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESNote payable of ESOP
$
$        
808Accrued expenses
2
--TOTAL LIABILITIES
$2
$808STOCKHOLDERS' EQUITY
49,809
46,889TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$     49,811
$     47,697========
========




|                                                                                     | 2001           | 2000        
|------------------------------------------------------------------------------------ | -------------- | ------------
|                                                                                     | (In thousands)
|STATEMENTS OF INCOME                                                                
|INCOME                                                                               |                |             
|Dividends from bank
subsidiary                                                       | $     3,705    | $      3,828
|Other income                                                                         | 36             | 63          
|TOTAL
INCOME                                                                         | 3,741          | 3,891       
|                                                                                     |                |             
|EXPENSES                                                                            
|Other expenses                                                                       | 224            | 120         
|TOTAL EXPENSES                                                                       | 224            | 120         
|                                                                                     |                |             
|Income before income taxes and equity in
undistributed net income of bank subsidiary | 3,517          | 3,771       
|Income tax expense (benefit)                                                         | (72)           | (21)        
|                                                                                     | 3,517          | 3,771       
|Equity in undistributed net income of
bank subsidiary                                | 2,172          | 820         
|NET INCOME                                                                           | $     5,761    | $      4,612
|                                                                                     | ========       | ========    



|                                                                                  | 2001           | 2000        
|--------------------------------------------------------------------------------- | -------------- | ------------
|                                                                                  | (In thousands)
|STATEMENTS OF CASH
FLOWS                                                         
|Operating Activities                                                              |                |             
|Net income                                                                        | $     5,761    | $      4,612
|Adjustments to reconcile net income to net
cash provided by operating activities: |                |             
|Undistributed income of
subsidiary                                                | (2,172)        | (820)       
|Decrease in other assets                                                          | 49             | 135         
|Increase (decrease) in
other liabilities                                          | 2              | (30)        
|NET CASH
PROVIDED BY OPERATING ACTIVITIES                                         | 3,640          | 3,897       
|                                                                                  |                |             
|Financing Activities                                                             
|Payment of dividends and payments in lieu
of fractional shares                    | (2,172)        | (820)       
|Sale of common stock                                                              |                | 300         
|Treasury stock transactions - net                                                 | (878)          | 138         
|NET CASH
USED BY FINANCING ACTIVITIES                                             | (4,583)        | (3,303)     
|                                                                                  |                |             
|INCREASE (DECREASE) IN CASH                                                       | (943)          | 594         
|Cash at beginning of year                                                         | 1,091          | 497         
|CASH AT END OF YEAR                                                               | $       
148   | $      1,091
|                                                                                  | ========       | ========    

NOTE 14 - LONG TERM
DEBT

First Citizens National Bank has secured advances from the Federal Home Loan Bank in the amounts of $60,575,000 at December 31, 2001, and $55,429,000 at December 31, 2000. At December 31, 2001, $60,574,621 is considered long-term in nature. These advances bear interest at rates which vary from 3.97% to 6.46% and mature in the years 2008 through 2011. The obligations are secured by the Bank's entire portfolio of fully disbursed, one to four family residential mortgages.

Delta Finance Company, a subsidiary of First Citizens National Bank, is obligated to General Appliance and Furniture Company, Inc. on an unsecured note payable in the amount of $1,000,000, which bears interest at the rate of five and three-quarter percent (5.75%) per annum and matures March 1, 2002. The Company has the intent and ability to renew the loan for another five years.

Delta Finance Company is also obligated to White and Associates/First Citizens Insurance, LLC on an unsecured note with an outstanding principal balance of one million, five hundred thousand dollars ($1,500,000). The debt bears interest at the rate 5.98 percent per annum and matures on March 1, 2002. The Company has the intent and ability to renew the loan at that time.

Averages for the years 2001 and 2000 are as follows:

AverageVolume
      AverageInterest Rate
      AverageMaturity(In
        thousands)2001First Citizens
        National Bank
      59,424
      5.36%
      3
        yearsDelta Finance
        Company
      2,233
      5.88%
      1
        year2000First Citizens
        Bancshares, Inc.
      920
      7.25%
      5
        yearsFirst Citizens
        National Bank
      56,929
      5.90%
      3
        yearsDelta Finance
        Company
      1,000
      6.00%
      5
        years


Maturities of principal
on the above referenced long-term debt for the following five years is as shown:

Years
        Ending December 31,2002
      $            --2003
      2,5002004
      --2005
      --2006
      --Thereafter
      60,575

      $  63,075


NOTE 15 - SHORT-TERM BORROWINGS

At December 31, 2001 and
2000, First Citizens National Bank had outstanding balances in short-term
borrowings as follows:

2001
      2000(In thousands)Outstanding balance - end of period
      $           --
      $  34,174Weighted Average Rate of Outstanding
      N/A
      5.55%Maximum Amount of Borrowings at Month End
      $  33,391
      $  54,600Average Amounts Outstanding for Period
      4,727
      49,436Weighted Average Rate of Average Amounts
      3.75%
      5.97%


NOTE 16 - NON-CASH INVESTING AND
FINANCING ACTIVITIES

During the periods presented, the Corporation
engaged in the following non-cash investing and financing activities:



Investing
2001
2000
1999(In thousands)Other real estate acquired insatisfaction of loans
$ 1,340
$ 804
$      
824Investment in First Volunteer
Corporation


3,775




NOTE 17 - FINANCIAL
INSTRUMENTS WITH OFF-BALANCE SHEET RISK

First Citizens National Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk, which are not recognized in the statement of financial position.

The Bank's exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The same policies are utilized in making commitments and conditional obligations as are used for creating on-balance sheet instruments. Ordinarily, collateral or other security is not required to support financial instruments with off-balance sheet risk.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer's credit-worthiness is evaluated on a case-by-case basis, and collateral required, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the counter party. At December 31, 2001 and 2000, First Citizens National Bank had outstanding loan commitments of $65,140,000 and $56,860,000, respectively. Of these commitments, none had an original maturity in excess of one year.

Standby letters of credit and financial guarantees are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are issued primarily to support public and private borrowing arrangements, and the credit risk involved is essentially the same as that involved in extending loans to customers. The Bank requires collateral to secure these commitments when it is deemed necessary. At December 31, 2001 and 2000, outstanding standby letters of credit totaled $1,032,000 and $1,761,000, respectively.

In the normal course of business, First Citizens National Bank extends loans, which are subsequently sold to other lenders, including agencies of the U. S. government. Certain of these loans are conveyed with recourse creating off-balance sheet risk with regard to the collectibility of the loan. At December 31, 2001 and 2000, however, the Bank had no loans sold.

NOTE 18 - SIGNIFICANT
CONCENTRATIONS OF CREDIT RISK

First Citizens National Bank grants agribusiness, commercial, residential, and personal loans to customers throughout a wide area of the mid-southern United States. A large majority of the Bank's loans, however, are concentrated in the immediate vicinity of the Bank or northwest Tennessee. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their obligations is dependent upon the agribusiness and industrial economic sectors of that geographic area.

NOTE 19 - DISCLOSURE
OF FAIR VALUE OF FINANCIAL INSTRUMENTS

The following assumptions were made and methods applied to estimate the fair value of each class of financial instruments reflected on the balance sheets of the Corporation:

CASH AND CASH EQUIVALENTS

For instruments, which qualify as cash equivalents, as described in Note 1 of Notes to Consolidated Financial Statements, the carrying amount is assumed to be fair value.

INVESTMENT SECURITIES

Fair value for investment securities is based on quoted market price, if available. If quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

LOANS RECEIVABLE

Fair value of variable-rate loans with no significant change in credit risk subsequent to loan origination is based on carrying amounts. For other loans, such as fixed rate loans, fair values are estimated utilizing discounted cash flow analyses, applying interest rates currently offered for new loans with similar terms to borrowers of similar credit quality. Fair values of loans which have experienced significant changes in credit risk have been adjusted to reflect such changes.

The fair value of accrued interest receivable is assumed to be its carrying value.

DEPOSIT LIABILITIES

Demand Deposits

The fair values of deposits which are payable on demand, such as interest-bearing and non-interest-bearing checking accounts, passbook savings, and certain money market accounts are equal to the carrying amount of the deposits.

Variable-Rate Deposits

The fair value of variable-rate money market accounts and certificates of deposit approximate their carrying value at the balance sheet date.

Fixed-Rate Deposits

For fixed-rate certificates of deposit, fair values are estimated using discounted cash flow analyses which apply interest rates currently being offered on certificates to a schedule of aggregated monthly maturities on time deposits.

SHORT-TERM BORROWINGS

Carrying amounts of short-term borrowings, which include securities sold under agreement to repurchase, approximate their fair values at December 31, 2001 and 2000.

LONG-TERM DEBT

The fair value of the Corporation's long-term debt is estimated using the discounted cash flow approach, based on the institution's current incremental borrowing rates for similar types of borrowing arrangements.

OTHER LIABILITIES

Other liabilities consist primarily of accounts payable, accrued interest payable, and accrued taxes. These liabilities are short-term and their carrying values approximate their fair values.

Unrecognized financial instruments are generally extended for short periods of time, and as a result, the fair value is estimated to approximate the face or carrying amount.

The estimated fair values of the Corporation's financial instruments are as follows:

2001
2000Carrying
Fair
Carrying
FairFinancial Assets
  
Amount
Value
Amount
Value(In thousands)Cash and cash equivalents
$ 31,183
$ 31,183
$ 23,927
$   23,927Investment securities
104,274
104,307
103,094
103,015Loans
369,026
  

340,959
Less: Allowance for loan losses
  
(4,015)
  
(3,763)Loans, net of allowance
365,011
377,781
337,196
329,573Accrued interest receivable
3,848
3,848
5,596
5,596Financial Liabilities
Deposits
403,508
405,909
371,854
373,051Short-term borrowings
17,827
17,827
34,174
34,174Long-term debt
  
63,075
  78.386
43,429
  41,474Other liabilities
3,772
3,772
3,800
3,800Unrecognized Financial Instruments
Commitments to extend credit
65,140
65,140
56,860
56,860Standby letters of credit
1,032
1,032
1,761
1,761


NOTE 20 - COMMITMENTS AND CONTINGENCIES

During the year ended December 31, 2000, the Board of Directors approved a stock repurchase plan whereby the Company is authorized to acquire up to a maximum of $5,000,000 of its outstanding capital stock over a five (5) year period. The stock repurchase plan is designed to enable First Citizens Bancshares, Inc. to meet the requirements of the Employee Stock Ownership Plan and reduce the number of shares outstanding in order to enhance earnings per share.

NOTE 21 - MERGERS AND ACQUISITIONS

First Citizens National Bank and White & Associates began the process of forming a credit life insurance company during 1998. During the year ended December 31, 1999, the credit life insurance company was chartered. Operating results for the year ended December 31, 2001, were a profit of $17,213.

Also, during 1998, First Citizens Bancshares, Inc. entered into an agreement to acquire all of the outstanding capital stock of First Volunteer Corporation, a one-bank holding company which owned First Volunteer Bank located in Union City, Tennessee. The acquisition was consummated on February 12, 1999, in a transaction recorded as a pooling-of-interests which involved the issuance of 445,251 shares of First Citizens Bancshares, Inc. common stock. Accordingly, all historical financial information of First Citizens Bancshares, Inc. for all periods presented has been restated to include the historical financial information of First Volunteer Corporation. Subsequently, First Volunteer Bank was merged with First Citizens National Bank and is operated as a branch bank.

NOTE 22 - EXECUTIVE PAYMENTS

In the acquisition of First Volunteer Corporation, as of January 1, 1999, First Citizens Bancshares, Inc. assumed the obligation for separation payments to two (2) executives of First Volunteer Corporation if the executives elected to terminate service with the Company. These separation payments are equal to approximately three (3) times the executives' annual compensation, plus an amount sufficient to pay applicable federal income taxes related to the separation payments. During the year ended December 31, 2000, these executives exercised their option to receive these payments. The expense was $809,000 and is reflected on the consolidated statement of income.

Note 23 - Prior Period Adjustment

During the year ended December 31, 2000, Delta Finance Company identified a difference in the unearned interest on loans in the amount of $125,753 between the amount reflected on the detailed loan trial balance and the amount shown on the company's general ledger. The discrepancy was traced to a data processing system malfunction in the year 1997. The company recorded a prior period adjustment, which after deducting applicable income taxes, totaled approximately $74,000.

Note 24 - Revolving Line of Credit

First Citizens Bancshares, Inc. has approved a two-year line of credit with First Tennessee Bank National Association in the amount of $8,000,000. Advances under this line of credit will be used for purposes of capital infusion or other liquidity needs of the parent company. Interest on the outstanding balance will be payable quarterly at a variable rate per annum. The variable rate of interest shall be 100 basis points below First Tennessee's Base Rate. At December 31, 2001, First Citizens Bancshares, Inc. had no indebtedness on this line of credit.

NOTE 23 - AMOUNTS
RECEIVABLE FROM RELATED PARTIES

Year Ended December 31,
2001(In thousands)Column A
  

Column B
  

Column C
  

Column D
  



Column EBalance at








Balance atBeginning








End ofof Period


Additions


Deductions


PeriodAmountsAmounts


Written




NotCollected


Off


Current


CurrentAggregate indebtedness
to First Citizens
National Bank of
Directors and Executive Officers
Of First Citizens
Bancshares, Inc. (26)
  

$ 8,858
$ 5,182


$ 4,673


$ -0-
$ 9,367
$ -0-=====

=====
=====

=====

=====

=====
Aggregate indebtedness
to First Citizens
National Bank ofDirectors and Executive OfficersOf First CitizensNational Bank (26)
  

$ 8,858
$ 5,182


$ 4,673


$ -0-
$ 9,367
$ -0-=====
  
=====

=====

=====

=====

=====




|                                 |  | Year Ended December 31,
2000
|-------------------------------- |  | ----------------------------
|                                 |  | (In thousands)              
|Column A                         |  | Column B                    
|                                 |  | Balance at                  
|                                 |  | Beginning                   
|                                 |  | of Period                   
|                                 |  |                             
|                                 |  |                             
|                                 |  |                             
|Aggregate indebtedness           |  |                             
|to First Citizens                |  |                             
|National Bank of                 |  |                             
|Directors and Executive Officers |  |                             
|Of First Citizens                |  |                             
|Bancshares, Inc. (26)            |  | $ 8,627                     
|                                 |  | =====                       
|Aggregate indebtedness           |  |                             
|to First Citizens                |  |                             
|National Bank of                 |  |                             
|Directors and Executive Officers |  |                             
|Of First Citizens                |  |                             
|National Bank (26)               |  | $ 8,627                     
|                                 |  | =====                       

Indebtedness shown represents amounts owed by directors and
executive officers of First Citizens Bancshares, Inc., and First Citizens
National Bank and by businesses in which such persons are general partners or
have at least 10% or greater interest and trust and estates in which they have a
substantial beneficial interest. All loans have been made on substantially the
same terms, including interest rates and collateral as those prevailing at the
time for comparable transactions with others and do not involve other than
normal risks of collectibility.

ITEM
9.   DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Bancshares had no disagreements regarding accounting
procedures.

---

PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information appearing in Bancshares' 2002 Proxy Statement
regarding directors and officers is incorporated herein by reference in response
to this Item.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this Item is set forth in the
2002 Proxy Statement, and is incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Ownership of Bancshares' common stock by
certain beneficial owners and by management is set forth in Bancshares' 2002 Proxy Statement for the Annual Meeting of Shareholders to be held April 19,
2002, in the sections entitled Voting Securities and Election of Directors and
is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

Officers, Directors and principal shareholders
of the holding company (and their associates) have deposit accounts and other
transactions with First Citizens National Bank. These relationships are covered
in detail on page 12 of the Proxy Statement under "Certain Relationships
and Related Transactions" and incorporated herein by reference. Additional
information concerning indebtedness to Bancshares and First Citizens by
Directors and/or their affiliates is included herein under Part III, Note 25 - "Amounts Receivable from Certain Persons".

---

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) 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)





Date: March 15, 2002                          /s/ 
STALLINGS LIPFORD                                                                                   
                                 
CHAIRMAN
                                   
                                                                   
First Citizens National Bank
                                            
                                                               
(Principal Subsidiary)



Date: March 15, 2002                 /s/    JEFF AGEE                                   
                                              
               EXECUTIVE
VICE PRESIDENT &
                                                                       
                            
CHIEF FINANCIAL OFFICER
                                                                                                       
First Citizens National Bank
                                    
                                                                       
(Principal Subsidiary)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the indicated capacities on March
1

/s/
        EDDIE ANDERSON
      
      /s/
        JOHN M. LANNOM
      
      /s/
        P. H. WHITE, JR.Director
      
      Director
      
      Director/s/
        J. WALTER BRADSHAW
      
      /s/
        STALLINGS LIPFORD
      
      /s/
        DWIGHT STEVEN WILLIAMSDirector
      
      Director
      
      Director/s/
        JAMES DANIEL CARPENTER
      
      /s/
        MILTON MAGEE
      
      /s/
        KATIE WINCHESTERDirector
      
      Director
      
      Director/s/
        WILLIAM C. CLOAR
      
      /s/
        MARY FRANCES MCCAULEY
      
      /s/
        BILLY S. YATESDirector
      
      Director
      
      Director/s/
        RICHARD W. DONNER
      
      /s/
        L. D. PENNINGTONDirector
      
      Director/s/
        BENTLEY F. EDWARDS
      
      /s/
        ALLEN SEARCYDirector
      
      Director/s/
        JULIUS M. FALKOFF
      
      /s/
        GREEN SMITHEALDirector
      
      Director/s/
        LARRY W. GIBSON
      
      /s/
        WILLIAM F. SWEATDirector
      
      Director/s/
        RALPH E. HENSON
      
      /s/
        DAVID R. TAYLORDirector
      
      Director/s/
        BARRY T. LADD
      
      /s/
        LARRY S. WHITEDirector
      
      Director


---