<PAGE>1
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


   For the Fiscal Year ended December 31, 2000 Commission File Number
   0-11709

                         FIRST CITIZENS BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)


            TENNESSEE
  (State or other jurisdiction of             62-1180360
  incorporation or organization)      (I.R.S. Employer Identification No.)


  P. O. Box 370
  First Citizens Place, Dyersburg, Tennessee                 38025-0370
  (Address of Principal Executive Offices)                   (Zip Code)


       Registrant's telephone number, including area code (901) 285-4410


         Securities registered pursuant to Section 12(b) of the Act:


                                                Name of each exchange
  Title of each class                            on which registered
        NONE                                           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, 2000 was $70,634,267.

  Of the  registrant's  only  class of common  stock (no par  value)  there were
  3,715,211 shares outstanding as of December 31, 2000 (net of Treasury Stock).

                       DOCUMENTS INCORPORATED BY REFERENCE

                               Portions of the
                 Proxy Statement dated March 16, 2001 (Part III)
                         Filed by Electronic Submission




      <PAGE>2
                           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)
                            2000         1999            1998

Total Assets            $500,954      $472,670          $472,153
Total Deposits           371,854       366,819        360,699
Total Net Loans          337,196       321,659        303,459
Total Equity Capital      46,889        43,680         43,082


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.








<PAGE>3

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:
<TABLE>
<CAPTION>
                        *12/31/00         12/31/99            12/31/98
             BANCSHARES PEER GRP BANCSHARES  PEER GRP BANCSHARES PEER GRP
<S>             <C>     <C>       <C>          <C>       <C>       <C>
Average Assets/
Net Interest
  Income        3.98%    4.13%     4.17%       4.14%      4.05%     4.20%

Average Assets/
Net Operating
  Income         .98%    1.11%     1.23%       1.08%      1.05%     1.16%
Net loan losses/
Average total
   loans         .40%     .15%      .28%        .17%       .23%      .22%

Primary Capital/
Average Assets  9.29%    8.64%     9.24%       8.58%      9.32%     9.23%
Cash Dividends/
Net Income **  71.64%   22.66%    58.35%      24.39%     57.51%    26.22%

</TABLE>
*Performance as of 12/31/00 is compared to peer group ratios as of
09/30/00

(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 and still pave the way for a new era in banking.

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.




        <PAGE>4


  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 bank  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:

         (1) 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;

         (2) 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







    <PAGE>5

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.

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.

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, 2000

Name                               Age    Position and Office
Stallings Lipford                  70     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.  The Board  elected
                                          Mr. Lipford  Chairman of both First
                                          Citizens and  Bancshares on February
                                          14, 1984.  He served as President of
                                          First Citizens  and  Bancshares from
                                          1983 to 1992, and as CEO of
                                          Bancshares and First Citizens from
                                          1992 until 1996.


      <PAGE>6

Katie Winchester                   60     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                       59     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.

Jeffrey Agee                       40     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                         60     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.

Judy Long                           46    Vice  President  and  Secretary to
                                          the Board of First Citizens
                                          Bancshares.  Appointed Executive Vice
                                          President and Chief Operations
                                          Officer and Secretary to First
                                          Citizens National Bank 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.

      <PAGE>7

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  tristate  and  service  the  encompassing  Northwest
Tennessee,  Northwest Arkansas, and the Missouri Bootheel 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.  The county's 526 farm  operations  average 445 acres.  Agriculture  loans
outstanding on the books of First Citizens National Bank totaled  $25,780,721 or
7.6 percent of total loans.  Agriculture  loans  totaling  $12,482,029  are well
secured with real estate,  including farmland,  residential property,  and other
improvements, while $10,007,711 are secured loans to finance crop production and
the purchase of equipment.  Approximately  $3.3 million in agriculture loans are
90% guaranteed by Farm Services  Administration (a government agency). There are
61  manufacturers  and processors  distributed  throughout the county  employing
approximately  7,500 people. The local economy appears to be slowing,  following
the trend which began  nationally in mid - 2000. In December  2000,  Dyer County
unemployment rate was 6.1% compared to the State of Tennessee  unemployment rate
of 3.8%. 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.

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, 2000 was 3.5% down
from 4.1% at December  31, 1999.  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 2000.
Total Assets of First Citizens  National Bank - Obion County offices in Troy and
Union City are  approximately $96 million  consisting  primarily of consumer and
retail  business loans.  Total assets of the Lauderdale  County office in Ripley
have  increased  to  approximately   $16.5  million   consisting   primarily  of
commercial, business and agriculture loans. Unemployment in Lauderdale County as
of December 31, 2000 was 6.1% compared to 3.8% 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.  Net income produced by this subsidiary  during 2000
was $126,000.



      <PAGE>8

First  Citizens was granted  trust powers in 1925 and has  maintained  an active
Trust Department since that time.  Assets as of December 31, 2000 were in excess
of  $141,755,000.  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.

On February 9, 1998,  White and  Associates/First  Citizens  Insurance,  LLC was
chartered  by the  State  of  Tennessee.  The  principal  office  of  White  and
Associates/First  Citizens,  originally  located  at 104  North  Monroe  Street,
Newbern,  Tennessee,  has  relocated  to the Main  Office of First  Citizens  in
Dyersburg, with one full-time agent remaining at the Newbern location. 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.

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 and will be known as First  Citizens/White
and Associates  Insurance  Company.  In January 1999, First Citizens merged with
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  Department at the Main Bank. Another full time insurance agent was
located in the Ripley 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.  First
Citizens National Bank income is projected to increase in excess of $300,000 the
first year of operation. In conjunction with the Nevada Corporation and transfer
of the  investment  portfolio,  First  Tennessee  will assume  management of the
portfolio.

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, 2000.


      <PAGE>9

                      Dyer, Lauderdale & Obion Counties Market
                                  (Bank's Only)
                                  (in thousands)
                          Total Deposits   % of Market Share
Bank Name                    06/30/00           06/30/00

First Citizens
National Bank                $   365,510           28.57%

First State Bank                 216,651           16.93%

Union Planters Bank,
National Association             122,064            9.54%

Bank of Ripley                   107,440            8.40%

Commercial Bank & Trust Co.       86,437            6.76%

Security Bank                     81,656            6.38%

First Tennessee Bank,
National Association              77,032            6.02%

Reelfoot Bank                     66,962            5.23%

Bank of Halls                     39,287            3.07%

Lauderdale County Bank            31,614            2.47%

Gates Banking & Trust Co.         24,876            1.94%

Bank Tennessee                    22,523            1.76%

BancorpSouth Bank                 15,200            1.19%

Farmers Bank,
Woodland Mills, TN                12,696            0.99%

City State Bank                    9,435            0.74%

       Total                  $1,279,383          100.00%

*Does not include  deposits of  $15,674,000  categorized  as Overnight and fixed
term Repurchase Agreements.

At December 31, 2000 Bancshares and its subsidiary,  First Citizens,  employed a
total of 209 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  the
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.


      <PAGE>10

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.

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's  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.





      <PAGE>11

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:

o     Removes  barriers  between  insurance,  banks,  and securities by allowing
      these  entities to merge and sell each  other's  products  under a holding
      company structure with some exceptions.
o     Reasserts the supremacy of state  regulation of the business of insurance
      with specific exceptions.
o     Prohibits  companies  outside the financial  services industry to purchase
      (merge/affiliate) with insurers, banks, and/or securities firms.
o     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.
o     Prohibits banks from tying the purchase of insurance and securities
      products as conditions for loan approvals.
o     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.
o     Allows  states  to  preempt   federal  laws  that  offer  greater  privacy
      protections  than those included in the Financial  Services  Modernization
      Act.
o     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:

o     Market  Awareness  -  Business   decisions  will  be  driven  by  a  clear
      understanding of the financial needs of existing and potential  customers,
      a focus on enhancing  our ability to serve those needs and an awareness of
      changes which might impact either or both.
o     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.


      <PAGE>12

o         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.
o         Staff  Development  - There is no one element  within an  organization
          more  important to success  than is 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.

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.  These  policies  will be submitted for
board approval on March 21, 2001 and will become effective April 1, 2001.

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

o    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.

o    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").

o    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:

o    Identify and assess the risks that may threaten customer information;

o    Develop a written plan containing policies and procedures to manage and
     control these risks;

o    Implement and test the plan; and

o    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




        <PAGE>13

Each  institution may implement a security  program  appropriate to its size and
complexity and the nature and scope of its operations.

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.  Bancshares  and First  Citizens  are  located  in a highly
competitive  market.  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.

The land and building  occupied by the Downtown  Drive-In  Branch located at 113
South  Church  Street,  Dyersburg,  Tennessee  is owned by First  Citizens.  The
building,  containing approximately 1,250 square feet, is located on a lot which
measures  120 feet  square.  Also  located at this  address  is a  separate  ATM
facility  wholly  owned by the Bank.  Construction  of a new  Downtown  Drive-In
facility on the  existing  site will begin  early in the second  quarter of 2000
with a projected  completion date of early fourth quarter. The new facility will
be  approximately  898  square  feet and will be a remote  motor  bank  with six
drive-thru  lanes and a drive-up  ATM lane.  The current  lobby  traffic will be
redirected to the Main Bank Office downtown. Drive-thru service for customers is
expected to continue without interruption during the construction.

      <PAGE>14

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.

During June, the Super Money Market Branch located inside the Kroger Supermarket
on Highway 78 was closed.  Significant effort was expended to redirect customers
to other branches,  with focus being on our new Green Village Office.  The Super
Money  Market  office  has for a number  of  years  evolved  to be a paying  and
receiving  station.  Net losses  continued  to  increase  and, at the same time,
monthly costs on a lease negotiated with NBC in 1986 increased with each renewal
at five-year  intervals.  This rate was more than twice the rate for  comparable
space in the Dyersburg area.

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.

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.

Construction of the new branch office in Lauderdale  County was completed during
the second quarter of 1999.  The building  contains  approximately  3,500 square
feet and was built on 1.151  acres of land  located at 316  Cleveland  Street in
Ripley,  providing  a  larger,  more  efficient  facility  to  better  serve our
customers in Lauderdale  County.  The Ripley Office offers full serving  banking
with drive up teller lanes,  twenty-four  hour drive up ATM as well as Mortgage,
Trust,  Brokerage and Insurance services.  Customers and staff celebrated a move
to the new location on July 1, 1999. First Citizens continued to retain title to
the original building. This property was held in bank premises until sold during
fourth quarter of 2000.

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.  The Troy  Branch  also
offered  limited  drive-through  services  at a location on Highway 51 which was
closed May 1, 1999.  Permission  to close this  location  was granted by the OCC
based on the limited volume of business  conducted by customers  compared to the
cost of operations. First Citizens has two ATMs located in Troy, one at 510 East
Harper Street and the other in the Little General Store.



      <PAGE>15

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 one ATM 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.  The ATM  located in the
Goodyear  Manufacturing  facility  in Union  City was  relocated  to the  Little
General Store in Troy on September 7, 2000.

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, 2000,  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,  2000 there were 982  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         Low

              March 31, 2000               $24.00      $24.00
              June 30, 2000                $24.00      $19.00
              September 30, 2000           $19.00      $19.00
              December 31, 2000            $19.00      $19.00


              March 31, 1999               $30.00      $30.00
              June 30, 1999                $30.00      $30.00
              September 30, 1999           $30.00      $30.00
              December 31, 1999            $30.00      $30.00



      <PAGE>16

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 - 2000
              Dividend                   Quarter
              Per Share                  Declared
                 .2250                       1st
                 .2250                       2nd
                 .2250                       3rd
                 .3250                       4th
                 -----
         Total $ 1.00

*Special dividend paid in fourth quarter 2000, 1999 and 1998.

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.
                                  (in thousands)
                              (except per share data)

                       2000     1999     1998     1997     1996
Net Interest &
 Fee Income         $ 18,594  $ 19,305  $ 17,964 $ 16,021 $ 14,956

Gross Interest
  Income            $ 38,137  $ 36,085  $ 35,252 $ 30,698 $ 28,862

Income From
 Continuing
  Operations        $  4,612  $  5,799  $  4,474 $  4,730 $  4,254

Long Term
 Obligations(1)     $ 43,429  $ 11,264  $ 25,486 $ 12,146 $  6,997

Income Per Share
 from Continuing
  Operation(2)      $   1.24  $   1.58  $   1.25 $   1.38 $   1.22

Net Income per
Common Share (2)
                    $   1.24  $   1.58  $   1.25 $   1.38 $   1.22
Cash Dividends
Declared
per Common
Share(2)            $   1.00  $    .90  $    .75 $    .50 $    .40

Total Assets at
Year End            $500,954  $472,670  $472,153 $384,183 $357,269

Allowance for
 Loan Losses
 as a % Loans          1.10%     1.14%     1.25%    1.21%    1.07%

Allowance for
 Loan Losses as
 a % of Non-
 Performing Loans     125.01%  445.26%   509.62%  461.76%  176.08%

Loans 90 Days
 Past Due as a
 % of Loans              .47%     .10%      .14%     .00%     .09%



      <PAGE>17

(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  (Bancshares)  is a financial  holding  company
headquartered  in  Dyersburg,  Tennessee and doing  business  primarily in Dyer,
Lauderdale and Obion Counties. The primary asset of Bancshares is First Citizens
National  Bank,  but also includes a full service  brokerage  subsidiary  (First
Citizens  Financial  Plus),  50%  ownership in a full service  insurance  agency
(White & Associates/First Citizens Insurance),  and a consumer finance affiliate
(Delta Finance).  The banking  structure  includes a Trust division,  a Mortgage
Loan department and an Electronic Banking/Call Center.

EARNINGS ANALYSIS:

First quarter of year 2000 produced positive results and held out the promise of
another record breaking year for earnings. Net income was up 8.6% over the prior
year, supported by growth in net interest income and a significant  contribution
from our brokerage subsidiary, First Citizens Financial Plus. Increased pressure
on net interest  margins in the second quarter  brought about by rising interest
rates  suppressed  earnings and produced results that were below the same period
in 1999.  Third and fourth  quarter  results were even more  stressed as margins
became tighter and earnings were further  reduced by payouts to two  individuals
choosing to exercise  contract options  available as a result of merger activity
in Obion County in 1998.  Total payout  exceeded  $800,000 and  represented  the
extent of First  Citizens'  contract  liability to employees of the merged bank.
Fourth quarter earnings were further impacted by an additional provision to loan
loss reserve  totaling $544 thousand,  which  represents  deterioration in three
credits and does not reflect a trend within the loan portfolio.

Interest income for the year increased  5.68%, a gain offset by a 6.46% increase
in interest  expense.  Six rate  increases by the Federal  Reserve in a one-year
period played havoc with net interest  margins and forced  management to rethink
our funding  strategy.  As a result,  the  decision  was made to  outsource  the
investment  portfolio  and  in so  doing,  avail  First  Citizens  of  expertise
unavailable  in-house.  We are now operating under a new Board approved strategy
recommended by the portfolio manager and are moving toward improved net interest
margins with less volatility when faced with market rates changes.

Other  income  improved  7.4% while other  expense was up only 2%,  exclusive of
contract payouts totaling  $809,000.  This was accomplished by a continued focus
on the  importance  of fee  income and a  commitment  to  managing  controllable
expense.  Future  acquisition  of companies in which  employees  hold  contracts
granting  golden  parachutes  will be handled  in a manner  that  addresses  the
financial  impact  at the  time of  transaction,  avoiding  the  situation  that
occurred in Year 2000.

ASSETS/LOANS/DEPOSITS:

The company hit a milestone in Year 2000 when assets  exceeded $500 million.  In
so  doing,  we  have  aligned  ourselves  with a new  peer  group  in  terms  of
comparison,  and will now be  governed  by rules  that  apply to banks over this
asset level.  The major impact will be dealt the audit function,  with the Board
Audit  Committee and the company's  External  Auditor being subjected to tighter
rules in terms of independence and qualification. We see no problem in complying
with the more rigid  criteria  and have taken  steps  necessary  to satisfy  SEC
requirements,  even though  Bancshares has a grace period which delays mandatory
compliance until 2003.



      <PAGE>18

Loan growth of 4.8% was centered  primarily in the  category of  commercial  and
residential real estate. Deterioration in the economy in general has resulted in
a tightening of loan  underwriting  standards  and  sacrificed a higher level of
growth to ensure continued quality in the portfolio.  Growth in the agricultural
segment of the portfolio has been negligible as farmers experienced a third year
of  less  than   satisfactory   results   with  no  real   promise  of  improved
profitability,  other than federal disaster  payments.  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
in the next two years as a result of lower  government  payments  and  increased
production  costs.  These statistics are based on normal weather  conditions,  a
continuation of present farm programs and  continuation of government loan rates
at their maximum levels.  In view of such dire predictions and a continuation of
year after year operating results that produce  inadequate profit levels,  banks
will become less inclined to provide  financing  needed to support the industry.
First  Citizens  remains  the  largest  agricultural  lender  in our  area.  Our
commitment  to the  industry has been  evident  since the bank was  chartered in
l889,  but we are obligated to  Shareholders  to recognize  risk inherent in any
industry  segment  and  make  lending  decisions  based  on  sound  underwriting
standards, including the ability to repay.

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  registrant  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.

Deposit market share of First  Citizens in Dyer County  increased from 53.75% at
June 30, 1999 to 57.67% as of June 30, 2000. This was accomplished  with deposit
growth of less than 1.5%,  emphasizing  the  challenge  to banks of funding  any
measurable volume of loan growth with growth in deposits. Liquidity continues to
be one of the most serious issues facing banks of all sizes.  First Citizens has
turned  primarily to the Federal Home Loan Bank to address  funding needs,  with
alternatives being lines of credit with correspondent banks and the Bankers Bank
as well as brokered deposits. While we would prefer to fund loans with deposits,
we  acknowledge  that  this is no longer an option  and  recognize  that  future
strategy  must insure a dependable  source of liquidity  that will support asset
growth.

SHAREHOLDER RETURN & EQUITY CAPITAL:

The highest  classification  in terms of capital  levels that can be assigned by
banking   regulators   is  "well   capitalized".   In  order  to   attain   this
classification,  banks  must  maintain a 10%  risk-based  capital  ratio.  First
Citizens'  risk-based  capital ratio as of December 31, 2000 was 13.78%,  almost
$13 million in excess of that  necessary to be classified at the highest  level.
While  earnings  were down for the year,  the Board made a decision  to increase
dividends by 10.5% based on the belief that the earnings  stall is temporary and
that  the  level  of  excess   capital   justifies  an  increase  in  payout  to
shareholders.  Stockholder  equity has grown  consistently,  supported  over the
years by strong earnings and quality assets.  Equity capital at 12/31/00 was $47
million  compared  to $44 million at year-end  1999,  up in excess of 7%.  Since
dividends  to  shareholders  in year  2000  were  81% of  earnings,  most of the
increase can be attributed to an  improvement in the  accumulated  adjustment of
unrealized loss on securities  available-for-sale  from ($2,036,000) at year-end
1999 to ($371) as of 12/31/00.



      <PAGE>19

OTHER ISSUES:

Bankruptcy continues to be an issue of major concern to banks nationwide. It has
been  determined  that the U.S.  economy loses $40 billion  annually  because of
bankruptcy  filings.  These losses are passed along to all consumers,  including
those who responsibly pay their debts, through higher interest rates,  increased
prices for goods and  services,  and reduced  credit  access.  In addition,  the
courts in West  Tennessee  have a reputation  for being  extremely  lenient with
debtors,  placing lending institutions and others who deal in credit at a higher
risk of loss than others  nationwide.  It is important to ensure that bankruptcy
protection  is  available to those who truly need it,  emphasizing  the need for
reform  that  focuses  on a  "needs-based"  approach  and  eliminates  the fraud
inherent in the current system.

Changes in Financial Accounting Standards

In June,  1998,  the  Financial  Accounting  Standards  Board (FASB)  issued its
Statement No. 133 Accounting for Derivative  Instruments and Hedging  Activities
which established accounting and reporting standards for derivative instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities. As issued FASB Statement No. 133 was to become effective for
all fiscal  quarters of all fiscal years beginning after June 15, 1999. In 1999,
the FASB issued  Statement No. 137 which delayed the effective date of Statement
No. 133 for one year until fiscal years  beginning  after June 15, 2000. In June
2000,  FASB  issued   Statement  No.  138  Accounting  for  Certain   Derivative
Investments and Certain Hedging  Activities which further amended  Statement No.
133 without  changing the effective date. As issued,  these  Statements  require
that  derivative  instruments be reported either as assets or liabilities in the
balance  sheet and that they be  reflected  at fair value.  The  accounting  for
changes in the fair value of a  derivative  depends on the  intended  use of the
instrument  and the  resulting  designation.  First  Citizens  Bancshares,  Inc.
utilized the derivative as a cash flow hedge,  hedging the  "benchmark  interest
rate."

Also in 2000, FASB issued Statement No. 139 which rescinded certain earlier FASB
statements and had no impact on the financial statements of the Company.

In September 2000, FASB Statement No. 140 Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities was issued.  Statement
No. 140 replaces Statement No. 125, which had the same name.  The pronouncement
revises standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures. The Statement
is effective for relevant transactions occurring after March 31, 2001.

NON-INTEREST INCOME

The following table reflects restated  non-interest  income for the years ending
December 31, 2000, 1999, and 1998:

                                          December 31
                                     Change from prior year
                                        (in thousands)
                            Increase                   Increase
                     Total (Decrease)           Total (Decrease)           Total
                     2000   Amount  Percentage  1999    Amount  Percentage 1998
Service Charges on
 Deposit Accounts   $2,711   $  303   12.58%   $2,408   $  331   15.93%   $2,077
Other Service Charges,
 Charges, Commissions
 & Fees             $1,881   $  224   13.51%   $1,657   $  544   48.87%   $1,113
Other Income        $1,480   $ (126)  (7.84%)  $1,606   $  207   14.79%   $1,399
TOTAL NON-INTEREST
 INCOME             $6,072   $  401    7.07%   $5,671   $1,082   23.57%   $4,589







      <PAGE>20

Growth in  non-interest  income is key to  sustaining  increases  in overall net
income as net interest margins continue to be squeezed.  The components of First
Citizens non-interest income include service charges on deposit accounts,  other
fees and service charges,  fiduciary income, ATM/POS interchange fees, and other
income from subsidiaries  (Financial Plus, White and  Associates/First  Citizens
Insurance,  Delta Finance).  Total  non-interest  income in 2000 increased 7% to
$6,072,000  compared  to a 23.6%  increase in 1999.  Service  charges on deposit
accounts increased 12.6% from 1999 to 2000 primarily due to increased  overdraft
fee  income.  A strong  focus on fee  income and  diversification  of the income
stream  is  reflected  in the  increased  percentages  in 2000 of 13.5% in other
service charges and fees.  Improved  earnings are attributed to continued growth
in income  received from Financial Plus,  Inc. and First Citizens  Insurance.  A
large  portion  of Trust  Department  fee income is  calculated  as a percent of
portfolio  market  value.  Volatility  in  financial  markets has  resulted in a
decrease  in  market  value  of  many  investment  portfolios,  thus  negatively
impacting  derived  income in this area.  In  addition,  total  volume of assets
managed has decreased resulting in lower fee income.

NON-INTEREST EXPENSE
                                         December 31
                                     Change from prior year
                                        (in thousands)
                             Increase                 Increase
                      Total  (Decrease)        Total  (Decrease)        Total
                      2000   Amount Percentage 1999    Amount Percentage 1998
Salaries & Employee
 Benefits           $ 8,751 $   79     .91%  $ 8,672 $  384    4.63%  $ 8,288
Occupancy Expense   $ 2,938 $  212    7.77%  $ 2,726 $  311   12.87%  $ 2,415
Other Operating
 Expense            $ 4,957 $  946   23.58%  $ 4,011 $   71    1.80%  $ 3,940
TOTAL NON-INTEREST
  EXPENSE           $16,646 $1,237    8.02%  $15,409 $  766    5.23%  $14,643

Total non-interest  expense increased  approximately 8% in 2000 primarily due to
an increase of $946,000 in other operating expense. This increase is a result of
the Obion County  payouts and the decrease in Trust  Department  income.  The 5%
increase  noted when  comparing  1999 to 1998  reflects  growth in salaries  and
benefits from the addition of employees at First  Volunteer  Bank, Bank of Troy,
Mortgage  Lending,  Financial  Plus,  Delta Finance and in support  positions at
First Citizens  National Bank.  The Bank of Troy,  Troy, TN and First  Volunteer
Bank, Union City, TN were converted to the books of First Citizens National Bank
in 1999 as branches of the bank. These conversions set the stage for a reduction
in  number  of  employees  as  well as  providing  for  economies  of  scale  in
information  systems.  Non-recurring  expense  incurred  at Bank of Troy in 1998
exceeded $1.3 million and included benefit plans,  additional loan loss reserves
and buy out of an  employment  contract  of the  Bank's  former  CEO.  Full-time
equivalent  employees  were 209 at December 31, 2000 compared to 203 at December
31, 1999. Assets per employee at December 31, 2000 was $2.4 million, up slightly
when compared to $2.3 at December 31, 1999 and 1998.

Other  operating  expense  increased 23.6% from 1999 to 2000. This increase is a
result of payouts to two  individuals  choosing  to  exercise  contract  options
available as a result of merger  activity in Obion County in 1998.  Total payout
exceeded  $800,000  and  represented  the  extent  of First  Citizens'  contract
liability to employees of the merged bank. Other components negatively impacting
this are were decreased Trust Department fee income and securities gains/losses.
Other  operating  expense  reflects  only a 2%  increase  exclusive  of contract
payouts.  Future  acquisition  of companies in which  employees  hold  contracts
granting  golden  parachutes  will be handled  in a manner  that  addresses  the
financial  impact  at the  time of  transaction,  avoiding  the  situation  that
occurred in Year 2000.


      <PAGE>21

Data  processing  expense  increased  in 1998 and 1999 as a result  of  software
enhancements,  the installations of a Wide Area Network, cost of addressing year
2000 issues,  associated merger costs, and the introduction of Online Banking to
our customers. The increase does not reflect the time and attention of key staff
members to ensure that systems were  compliant and would deal  efficiently  with
the new millennium date change.  Increase in occupancy expense from 1998 to 1999
was greatly  influenced by the  construction of the new branch office in Ripley,
early  construction  stages  of the new  Green  Village  Office,  and  increased
depreciation expense.

Efficiencies implemented over the past five years have reduced and/or controlled
non-interest  expense in an acceptable  manner.  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.

                 Assets Per Employee        Asset Per Employee
                                              Peer Groups
December 31                     (in thousands)

   2000               $2,397                      $2,860
   1999               $2,328                      $2,540
  *1998               $2,354                      $2,400
   1997               $2,151                      $2,400
   1996               $2,159                      $2,300

*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:

                                          December 31
                                        (in thousands)
                         2000                1999              1998

                  Average   Average  Average   Average  Average   Average
                  Balance    Rate    Balance    Rate    Balance    Rate
Non-Interest
Bearing Demand
Deposits         $ 39,549   0.00%    $ 39,805   0.00%    $ 37,742   0.00%

Savings Deposits $114,316   3.04%    $111,278   2.99%    $106,259   3.20%

Time Deposits    $210,177   5.79%    $208,908   4.91%    $202,370   5.62%

TOTAL DEPOSITS   $364,042   4.30%    $359,991   3.77%    $346,371   4.27%

Deposits  increased 1.13% in 2000 in comparison to 3.9% in 1999.  Total deposits
have   been   restated   as   required   by  FASB   Accounting   Standards   for
pooling-of-interests. Actual deposit growth in 1999, including deposits acquired
from mergers and acquisitions,  was 34.85 percent. The company's  marketplace is
described as highly  competitive,  with a fairly  sophisticated  customer  base.
Competition is aggressive for both loans and deposits.  Retention of savings and
time  deposits  continues  to  be a  challenge  with  increased  competition  by
brokerage  firms,  insurance  companies and other financial  service  providers.
Competitor marketing programs are aggressive in seeking new deposit dollars with
advertising programs that offer above maket rates on certificates of deposits in
some  market  areas.  According  to a recent  survey  First  Citizens  maintains
approximately  58% of Dyer County market share; 15% of Obion County market share
and 5% of Lauderdale  County  market  share.  In the Dyer County market the bank
competes with Union Planters (7.5%),  First Tennessee Bank (16%),  Security Bank
(17%),  and City State Bank (2%).  The bank's  largest  competitor in Lauderdale
County is Bank of Ripley (36.5%).  Competition in Obion County ranks First State
Bank



       <PAGE>22

43.1% market share,  Commercial  Bank and Trust 17.2%,  Union Planters 9.3%, and
Reelfoot Bank 13.3%.

Deposit growth remained  relatively flat in 2000. The average rate paid on total
deposits continued to decline from 4.27% in 1998 to 3.77% in 1999.  However,  an
increase  in rates by the  Federal  Reserve  prompted a  reversal  of this trend
during the fourth  quarter of 1999. As a result,  the average rate paid on total
deposits  increased  to 4.30% in 2000.  The new "Wall Street  Checking"  account
introduced  during  third  quarter is  designed  to support  efforts to grow the
deposit base. This account combines  benefits of unlimited  checking and earning
rates competitive with those paid by brokers.  The management of liquidity needs
has evolved as a major challenge to community banks. Making the right investment
choices,  identifying  funding  sources  that  impose  the  least  risk to First
Citizens 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  existing  customers and to attract new customer  relationships.
First Citizens  introduced  Internet based banking to the market place September
1, 1999. The service allows customers to access account  information,  statement
activity,  apply  for  a  deposit  or  loan  and  pay  bills  by  signing  on to
firstcitizens-bank.com. The cost of Internet banking is free to customers, while
bill pay is offered at a competitive  price. The bank's Call Center now provides
more  efficient  customer  support from account  inquiry to  electronic  banking
products and services.  A focus on developing the Small Business  segment of our
customer base has been  significantly  enhanced by the introduction of a trio of
Internet products that promote a "Surf Locally,  Shop Locally" theme. A web page
development service, the ability to be a part of a virtual Internet Mall and the
introduction of First Citizens as an Internet  Service Provider (ISP) will place
our organization well above the competition in this business segment.

SHORT TERM BORROWINGS
                                      12/31/00      12/31/99
Amount outstanding-end of Period      $34,174        $46,090
Weighted Average Rate of Outstanding    5.55%          4.56%
 Maximum Amount of Borrowings at
  Month End                            54,600         47,470
Average Amounts Outstanding for
  Period                               49,436         32,759
Weighted Average Rate of Average
  Amounts                               5.97%          4.46%

Long term  debt for 2000 is  comprised  of  Federal  Home  Loan Bank  borrowings
totaling  $56,929,000 and Delta Finance Company obligation of $1,000,000.  Other
long term obligations consist of a note payable of Employee Stock Ownership Plan
to Suntrust Bank, balance at 12/31/00 of $920,000.  1999 long term debt included
Federal Home Loan Bank borrowings  totaling  $12,528,000,  Delta Finance Company
debt  of  $1,000,000,  and the  Employee  Stock  Ownership  Plan  obligation  of
$1,117,000.

                        Average  Average   Average   Repricing
                         Volume   Rate     Maturity   Frequency
FHLB Borrowings          56,929   5.90%    3 years     Fixed
Finance Company Debt      1,000   6.00%    5 years     Fixed
ESOP Obligation             920   7.25%    5 years    Monthly

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.


      <PAGE>23

MATURITY DISTRIBUTION OF TIME DEPOSITS IN AMOUNTS OF $100,000 AND OVER

                                          December 31
                                        (in thousands)
                                   2000                  1999
                           Amount       Percent  Amount       Percent
 Maturing in:
3 months or less           $45,450       62.19%  $44,946       63.42%
Over 3 through 12 months   $22,703       31.05%  $22,980       32.43%
Over 12 months             $ 4,948        6.76%  $ 2,936        4.15%

     TOTAL                 $73,101      100.00%  $70,862      100.00%

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)
                           2000                     1999                1998
FUNDING USES         Average  Increase        Average  Increase        Average
                     Balance (Decrease)       Balance (Decrease)       Balance
                          Amount           %       Amount          %     Amount
INTEREST-EARNING
ASSETS:
Loans (Net of
Unearned Discounts
& Reserve)          $330,468  $ 7,421   2.29% $323,047  $33,631  11.62% $289,416

Taxable Investment
Securities          $ 87,108  $(2,260) (2.52%)$ 89,368  $ 5,449   6.49% $ 83,919

Non-Taxable
Investment
Securities          $ 13,078  $     6    .04% $ 13,072 ($ 1,127) (7.93%)$ 14,199

Federal Funds
Sold                $  1,201  $(1,489)(55.35%)$  2,690 ($ 6,060) 69.25% $  8,750

Interest Earning
Deposits In
Banks               $  1,549  $   518  50.24% $  1,031  $    51   5.20% $    980

TOTAL INTEREST-
EARNING ASSETS      $433,404  $ 4,196    .97% $429,208  $31,944   8.04% $397,264
Other Uses          $ 51,296  $ 7,620  17.44% $ 43,376  $ 5,218  13.67% $ 38,158
TOTAL FUNDING
  USES              $484,700  $12,116   2.56% $472,584  $37,162   8.53% $435,422
INTEREST-BEARING
  LIABILITIES:
Savings
 Deposits           $114,316  $ 3,038   2.73% $111,278  $ 5,019   4.72% $106,259
Time Deposits       $210,177  $ 1,269    .60% $208,908  $ 6,538   3.23% $202,370
Federal Funds
Purchased and
Other Interest
Bearing Liabilities $ 71,822  $ 6,904  10.63% $ 64,918  $18,418  39.60% $ 46,500
TOTAL INTEREST-
BEARING LIABILITIES $396,315  $11,211   2.91% $385,104  $29,975   8.44% $355,129
Demand Deposits     $ 39,549  $  (256)  (.64%)$ 39,805  $ 2,063   5.46% $ 37,742
Other Sources       $48,836   $ 1,161   2.43% $ 47,675  $ 5,124  12.04% $ 42,551

TOTAL FUNDING
 SOURCES:           $484,700  $12,116   2.56% $472,584  $37,162   8.53% $435,422


      <PAGE>24

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

                               Monthly Average Balances and Interest Rates
                                              (in thousands)
                            2000                    1999                       1998
                 Average            Average  Average           Average   Average         Average
                 Balance   Interest  Rate    Balance  Interest   Rate    Balance  Interest  Rate
<S>              <C>       <C>      <C>     <C>       <C>       <C>    <C>       <C>      <C>
ASSETS
INTEREST EARNING
  ASSETS:
  Loans (1)(2)
        (3)      $330,468  $31,631  9.57%   $323,047  $29,382  9.10%   $289,416  $28,502  9.84%

Investment
Securities:

  Taxable        $ 87,108  $ 5,732  6.58%   $ 89,368  $ 5,903  6.61%   $ 83,919  $ 5,405  6.44%
Tax Exempt (4)   $ 13,078  $   959  7.33%   $ 13,072  $   938  7.18%   $ 14,199  $ 1,085  7.64%
Interest Earning
  Deposits       $  1,549  $    86  5.55%   $  1,031  $    42  4.07%   $    980  $    55  5.61%

Federal Funds
Sold             $  1,201  $    55  4.57%   $  2,690  $   148  5.50%   $  8,751  $   639  7.30%

Lease Financing  $      0  $     0     0%   $      0  $     0     0%   $      0  $     0     0%
Total Interest
  Earning Assets $433,404  $38,463  8.87%   $429,208  $36,413  8.48%   $397,264  $35,686  8.98%
NON-INTEREST
  EARNING ASSETS:
Cash and Due From
  Banks          $ 12,736  $     0     0%   $ 13,531  $     0     0%   $ 12,005  $    0      0%
Bank Premises and
  Equipment      $ 14,101  $     0     0%   $ 13,035  $     0     0%   $ 10,180  $    0      0%
Other Assets     $ 24,459  $     0     0%   $ 16,810  $     0     0%   $ 15,973  $    0      0%
Total Assets     $484,700  $     0     0%   $472,584  $     0     0%   $435,422  $    0      0%

LIABILITIES AND
 SHAREHOLDERS'
  EQUITY:
INTEREST BEARING
  LIABILITIES:
Savings Deposits $114,316  $ 3,481  3.04%   $111,278  $ 3,324  2.99%   $106,259  $ 3,400 3.20%
   (5)

Time Deposits    $210,177  $12,183  5.79%   $208,908  $10,262  4.91%   $202,370  $11,391 5.62%
Federal Funds
  Purchased and
  Other Interest
  Bearing
  Liabilities    $ 71,822  $ 3,879  5.40%   $ 64,918  $ 3,194  4.92%   $ 46,500  $ 2,497 5.36%
Total Interest
  Bearing
  Liabilities    $396,315  $19,543  4.93%   $385,104  $16,780  4.36%   $355,129  $17,288 4.86%

NON-INTEREST
  BEARING
  LIABILITIES:

Demand Deposits  $ 39,549  $     0     0%   $ 39,805  $     0     0%  $ 37,742   $     0    0%
Other
  Liabilities    $  3,451  $     0     0%   $  3,993  $     0     0%  $  2,688   $     0    0%
Total
  Liabilities    $439,315  $     0     0%   $427,762  $     0     0%  $395,559   $     0    0%

SHAREHOLDERS'
  EQUITY         $ 45,385  $     0     0%   $ 43,682  $     0     0%  $ 39,863   $     0    0%






     <PAGE>25

TOTAL LIABILITIES
  AND SHAREHOLDERS'
  EQUITY         $484,700  $     0     0%  $472,584  $     0      0%  $435,422   $     0    0%

NET INTEREST
  INCOME         $      0  $18,920     0%  $      0  $19,633      0%  $      0   $18,398    0%

NET YIELD ON
  AVERAGE EARNING
  ASSETS         $      0  $     0  4.36%  $      0  $     0   4.57%  $      0   $     0 4.63%
 </TABLE>

(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 nonaccrual 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
(First Citizens          2000 Compared to 1999        1999 Compared to 1998
 National Bank)           Due to Changes in:          Due to Changes in:
                                        Total                      Total
                       Average Average Increase  Average Average Increase
                       Volume   Rate  (Decrease) Volume   Rate (Decrease)
Interest Earned On:                     (in thousands)

  Loans                $  675    $1,574  $2,249  $3,309  $(2,429) $  880
  Taxable Investments    (149)      (22)   (171)    351      147     498
  Tax Exempt Investment
   Securities               1        20      21     (86)     (61)   (147)
  Interest Bearing
   Deposits with Other
   Banks                   21        23      44       3      (16)    (13)

  Federal Funds Sold and
   Securities purchased
   under agreements to
   resell                 (82)      (11)    (93)   (442)     (49)   (491)

Lease Financing             0         0       0       0        0       0

TOTAL INTEREST EARNING
 ASSETS                $  466    $1,584  $2,050  $3,135  $(2,408)  $ 727
Interest Paid On:
  Savings Deposits         91        66     157     161     (237)    (76)
Time Deposits             623     1,298   1,921     367   (1,496) (1,129)
Federal Funds Purchased
    and Securities Sold
    Under Agreement to
    Repurchase            340       345     684     987     (290)    697

TOTAL INTEREST BEARING
   LIABILITIES         $1,054   $1,709   $2,763  $1,515  $(2,023) $ (508)

NET INTEREST EARNINGS  $ (588)  $ (125)  $ (713) $1,620  $  (385) $1,235




        <PAGE>26

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.  Total  interest
earning  assets  increased  .98% and 8.4% when  comparing 2000 to 1999 and 1998.
Total  interest  bearing  liabilities  increased  2.91% and 8.44% when comparing
2000,  1999,  and 1998  respectively.  Total interest  earning  assets  averaged
$433,404,000  at  an  average  rate  of  8.87%  while  total  interest   bearing
liabilities  averaged  $396,315,000  at an average  rate of 4.93%.  Net yield on
average earning assets  (annualized)  was 4.36%,  4.57%, and 4.63% for the years
2000,  1999, and 1998.  Six rate increases by the Federal  Reserve in a one-year
period played havoc with net interest  margins and forced  management to rethink
our funding  strategy.  As a result,  the  decision  was made to  outsource  the
investment  portfolio  and  in so  doing,  avail  First  Citizens  of  expertise
unavailable  in-house.  We are now operating under a new Board approved strategy
recommended by the portfolio manager and are moving toward improved net interest
margins with less volatility when faced with market rate changes. Other measures
taken include  utilization of long term  borrowings in brokered CD's and Federal
Home Loan Bank funds.

  LOAN PORTFOLIO ANALYSIS
  COMPOSITION OF LOANS
                                            December 31
                                          (in thousands)
                            2000     1999     1998       1997     1996
  Real Estate Loans:

  Construction           $ 34,195  $ 34,431  $ 28,048  $ 23,378  $ 21,564

  Mortgage               $197,040  $189,787  $159,637  $151,333  $142,079

  Commercial, Financial
  and Agricultural Loans $ 63,703  $ 60,446  $ 87,927  $ 52,212  $ 46,581

  Installment Loans to
  Individuals            $ 42,754  $ 37,595  $ 29,197  $ 26,904  $ 23,743

  Other Loans            $  3,267  $  3,118  $  2,522  $  2,512  $  2,479

  TOTAL LOANS            $340,959  $325,377  $307,331  $256,339  $236,446

  CHANGES IN LOAN CATEGORIES

               December 31, 2000 as compared to December 31, 1999
                                 (in thousands)

                          Amount of Increase            % of Increase
  Loan Category               (Decrease)                   (Decrease)

  Real Estate                  $ 7,017                       3.12%
  Commercial, Financial
    and Agricultural           $ 3,257                       5.38%

  Installment Loans to
   Individuals                 $ 5,159                      13.72%

  Other Loans                  $   149                       4.77%

  TOTAL LOANS                  $15,582                       4.78%



        <PAGE>27

Outstanding  loans at year-end  2000  increased  4.79% when compared to year-end
1999.  The 1998 total loan balance has been restated to include  loans  acquired
from First Volunteer totaling $28.7 million.  Loan growth consisted of increased
volume in all loan  categories,  with the largest percent growth of 13.72% or $5
million  reflected  in  Installment  Loans and the largest  volume  growth of $7
million reflected in Real Estate Loans.  Commercial,  Financial and Agricultural
Loans reflected a 31.25% decrease from 1998 to 1999 primarily due to paydowns in
commercial   loans.   The  expansion  into  Obion  County  affords  new  lending
opportunities,  which would support future growth projections, while at the same
time building on existing customer  relationships.  Net loan growth for the five
years  ending  December,  2000 was  approximately  44 percent.  Competition  for
quality loans  continues to place pressure on the yield and terms  customers are
willing to accept.  Loan  Administration  has taken a  conservative  position in
dealing with situations which deviate from established  underwriting procedures,
while at the same time recognizing the need to maintain loan growth.

An increase of 22% for the year ending December 31, 1998 reflects loans acquired
as a result of the Troy acquisition.  Loan growth of 4.8% was centered primarily
in the category of commercial and residential real estate.  Deterioration in the
economy in general has resulted in a tightening of loan  underwriting  standards
and  sacrificed  a higher  level of growth to ensure  continued  quality  in the
portfolio.  Growth  in the  agricultural  segment  of  the  portfolio  has  been
negligible as farmers experienced a third year of less than satisfactory results
with no real  promise of improved  profitability,  other than  federal  disaster
payments.  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  in the next two years as a result of
lower government  payments and increased  production costs. These statistics are
based on normal weather conditions,  a continuation of present farm programs and
continuation of government  loan rates at their maximum levels.  In view of such
dire  predictions and a continuation  of year after year operating  results that
produce  inadequate  profit  levels,  banks will become less inclined to provide
financing  needed to support the industry.  First  Citizens  remains the largest
agricultural lender in our area. Our commitment to the industry has been evident
since the bank was chartered in l889,  but we are obligated to  Shareholders  to
recognize risk inherent in any industry segment and make lending decisions based
on sound underwriting standards, including the ability to repay.

Mortgage loans have  experienced  continued  growth of more than 38% since 1996,
with only a 3.12%  increase from 1999 to 2000  primarily due to the six interest
rate  increases.  The upward trend is attributed to  substantial  growth in Dyer
County  population as well, the number of households  recorded in Dyer county in
the  past  decade  and  strong  economic  conditions.   Market  information  and
employment  rates are  published  in this report in the section  titled  Banking
Business.

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.  Real
estate  related loans total over $231  million.  Problem  loans  increased  $1.6
million when  compared to December 31, 1999.  Problem loans at December 31, 2000
were  $8.7  million  or 2.5% of total  loans.  The  provision  for  loan  losses
increased  in  proportion  to loan  growth  and added risk as  dictated  by loan
policy.

The book value of repossessed  real property held by First Citizens was $318,000
at December 31, 2000 compared to $390,458 at December 31, 1999.  Accounting  for
adjustments  to the value of Other  Real  Estate  when  recorded  subsequent  to
foreclosure is accomplished on the basis of independent appraisal.  The asset is
recorded at the lesser of its appraised value or the loan balance.









        <PAGE>28

  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           Max. Amortization          Max. LTV
  ----------           -----------------          --------

  Real Estate        Various (see discussion)    Various (see discussion)
  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)

  *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 Limit

        Raw 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%







      <PAGE>29

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 Period

        Raw Land                               10 years
        Construction:
          Commercial, multi-family, and
          other non-residential                20 years
          1-to-4 family residential            20 years
        Improved Property Farmland             20 years
        Owner-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:

              2000 -  9.57%
              1999 -  9.10%
              1998 -  9.72%
              1997 -  9.70%
              1996 -  9.71%

The  aggregate  amount of unused  guarantees,  commitments  to extend credit and
standby letters of credit was $56,803,000 at December 31, 1999.

     LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES

                                         Due after
                        Due in one       one year but         Due after
                        year or less     within five years   five years
                                        (in thousands)

Real Estate               $48,140           $134,048            $49,047
Commercial, Financial
 and Agricultural         $29,278            $26,646            $ 7,779
All Other Loans           $10,281            $34,218            $ 1,522
TOTALS                    $87,699           $194,912            $58,348





      <PAGE>30

Loans with Maturities After One Year for which:
                                                (in thousands)
Interest Rates are Fixed or Predetermined             $219,203
Interest Rates are Floating or Adjustable             $ 34,057

The  degree of  interest  rate 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,  (by employing
interest-sensitive  funds in assets that are also interest sensitive).  One tool
used to ensure  market  rate  return is  variable  rate  loans.  Loans  totaling
$121,756,000  or 35.71% of the total  portfolio are subject to repricing  within
one year or carry a variable  rate of interest.  Loan  maturities  in the one to
five  year  category  increased  to  $194,912,000  at  December  31,  2000  from
$169,881,000 at December 31, 1999.

NON-PERFORMING LOANS

Nonaccrual, Restructured and Past Due Loans and Foreclosed Properties
(First Citizens National Bank)
                                               December 31
                                              (in thousands)

                         2000      1999      1998      1997      1996
Nonaccrual Loans        $1,389    $ 500     $ 303     $ 440    $1,118

Restructured Loans          0         0         0         0         0

Foreclosed Property
  Other Real Estate,      318       390       177         0        50
Other Repossessed
  Assets                    0         0         0         0         0
Loans and leases 90 days
  Past due and still
  accruing interest     1,621       335       425       164       177
Total Nonperforming
  Assets               $1,939    $1,225     $ 905     $ 604    $1,295

Nonperforming assets
 as a percent of
 loans and leases
 plus foreclosed
 property at end
 of year                 .56%      .37%      .33%      .27%      .62%

Allowance as a percent of:

Nonperforming
  assets              194.06%   303.51%   386.30%   461.76%   176.22%

Gross Loans             1.10%     1.14%     1.26%     1.22%     1.08%

Addition to Reserve as a
  percent of Net
  Charge-Offs         103.29%    59.30%   154.27%   364.07%   112.16%

Loans and leases 90 days
  past due as a percent of
  loans and leases at year
  end                    .47%      .10%      .15%      .08%      .09%
Recoveries as a
  percent of Gross
  Charge-Offs          19.69%    27.92%    34.77%    41.11%    20.15%









      <PAGE>31

Total Non Performing  Assets were $1,939,000 as of December 31, 2000 compared to
$1,225,000 at year end in 1999. Non performing  Assets as a percent of loans was
 .56%  compared  to .37% in 1999 and .33% in 1998.  The  provision  for loan loss
reserves was increased by 96% over the 1999  allocation.  A major portion of the
increase can be  attributed to three  unrelated  credits and does not reflect an
overall  decline in credit  quality  within the  portfolio.  Allowance  for Loan
Losses as a percent  of  Nonperforming  assets  and total  loans  were  194.06%,
303.51%,  and 386.30% for each year ending  December 31, 2000,  1999,  and 1998.
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 2000.  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 & RESERVE FOR LOAN LOSSES (in thousands)

                      2000       1999       1998      1997      1996
Average Net Loans
Outstanding        $330,468   $323,047   $259,416  $ 220,985  $203,663

Balance of Reserve
for Loan Losses
at Beginning of
Period             $  3,718   $  3,496   $  2,789  $   2,282  $  2,216

Loan Charge-Offs   $ (1,701)  $ (1,214)  $   (952) $    (326) $   (680)



      <PAGE>32

Recovery of Loans
Previously Charged
Off                $    335   $    339   $    331  $     134  $    137

Net Loans Charged
Off                $  1,366   $   (875)  $   (621) $    (192) $   (543)

Additions to Reserve
Charged to Expense $  1,411   $    720   $    958  $     699  $    609

Changes Incident
to Mergers         $      0   $    377   $    370  $       0  $      0

Balance at End of
Period             $  3,763   $  3,718   $  3,496  $   2,789  $  2,282
Ratio of Net Charge-
Offs to Average Net
Loans Outstanding      .40%       .28%       .23%       .09%      .27%

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  $1,701,000  (2)  Recovery  of loans
previously   charged  off  $335,000  and  (3)  Additions  to  reserves  totaling
$1,411,000.

The  provision  for  loan  loss  reserves  was  increased  by 96%  over the 1999
allocation. A major portion of the increase can be attributed to three unrelated
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.



      <PAGE>33

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 ANALYSIS

                          AVERAGE         PERCENT   CURRENT   RESERVE
          LOSS 1 YR.      BALANCE 1 YR.             BALANCE   REQUIRED

  I. CREDIT      $         GROSS  $             %     $          $
     CARDS

 II. INSTALL.    $         NET    $             %     $          $
     LOANS

III. IMPAIRED WITH ALLOCATIONS                        $          $
     IMPAIRED WITHOUT ALLOCATIONS                     $          $



      <PAGE>34

                                        ALLOWANCE
 IV. DOUBTFUL                              50.00%     $          $
     SUBSTANDARD                           10.00%
     ACCOUNTS RECEIVABLE FACTORING          1.00%
     WATCH                                  5.00%
     OTHER LOANS NOT LISTED PREVIOUSLY       .75%
     LESS SBA/FMHA GUARANTEED PORTIONS

     TOTAL LOANS                                      $

  V. LETTERS OF CREDIT                       .75%     $          $

 VI. OTHER REAL ESTATE OWNED                                     $

     RESERVE REQUIRED                                            $

     RESERVE BALANCE                                             $

     EXCESS (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, 2000 to be as follows:

Domestic                                            Amount
  Commercial, Financial & Agricultural            $450,000
  Real Estate-Construction                               0
  Real Estate-Mortgage                             150,000
  Installment Loans to individuals & credit cards  250,000
  Lease financing                                        0

            01/01/00 through 12/31/00   Total     $850,000

The following table will identify charge-offs by category for the periods ending
December 31 as indicated:

                                    Year Ending December 31
                                        (in thousands)
                               2000     1999      1998     1997
Charge-offs:
 Domestic:
  Commercial, Financial &
      Agricultural           $  761   $  236    $ 228     $  23
Real Estate-Construction          0        0        0         0
  Real Estate-Mortgage          340      142      158         0
  Installment Loans to
   individuals & credit cards   600      836      566       303
  Lease financing                 0        0        0         0

         Total               $1,701   $1,214    $ 952     $ 326



      <PAGE>35

Recoveries:
 Domestic:
  Commercial, Financial &
     Agricultural            $   52   $   89     $ 165    $  43
  Real Estate-Construction        0        0         0        0
  Real Estate-Mortgage           39        6         9        2
Installment Loans to
   individuals & credit cards   244      244       157       89
  Lease financing                 0        0         0        0

          Total              $  335   $  339     $ 331    $ 134

Net Charge-offs             $(1,366)  $ (875)    $(621)   $(192)

COMPOSITION OF INVESTMENT SECURITIES
                                              December 31
                                             (in thousands)

                             2000     1999     1998     1997     1996

U. S. Treasury &
 Government Agencies       $82,707 $83,372 $ 89,410   $62,976   $66,194

State & Political
 Subdivisions              $13,959 $12,515 $ 17,113   $11,799   $11,729

All Others                 $ 6,428 $ 3,250 $  3,207   $ 2,740   $ 3,649

            TOTALS        $103,094 $99,137 $109,730   $77,515   $81,572


MATURITY AND YIELD ON SECURITIES - DECEMBER 31, 2000
                                   (in thousands)

                           Maturing        Maturing
                Maturing   After One      After Five     Maturing
               Within One  Year Within    Years Within   After Ten
                  Year     Five Years      Ten Years      Years
             Amount Yield Amount  Yield  Amount  Yield  Amount Yield
U. S. Treasury
and Government
Agencies    $ 2,500 6.02% $36,419 6.06% $25,087 6.50%  $18,701 6.58%

State and
Political   $   245 6.19% $   892 6.40% $ 5,820 6.59%  $ 7,002 7.44%
Subdivisions*

All Others  $     0    0% $   985 6.68% $ 3,943 5.55%  $ 1,500 9.74%
            ------- ----- ------- ----- ------- -----  ------- -----

TOTALS      $ 2,745 6.05% $38,296 6.08% $34,850 6.40%  $27,203 6.97%

*Yields on tax free investments are stated herein on a taxable equivalent basis.


      <PAGE>36

HELD TO MATURITY & AVAILABLE FOR SALE SECURITIES - DECEMBER 31, 2000

                                        Held to Maturity   Available for Sale
                                                    (in thousands)
                                        Amortized  Fair     Amortized   Fair
                                          Cost     Value       Cost     Value

U.S. Treasury Securities                      0         0      2,028    2,037
U.S. Government Agency and
 corporation obligations                 15,007    14,903     66,372   65,660
Securities issued by states & political
 subdivisions in the U.S.:
 Taxable Securities                           0         0          0        0
 Tax-exempt Securities                    1,698     1,723     12,068   12,263
U. S. Securities:
 Debt Securities                              0         0      2,920    2,925
 Equity Securities
 (Including Federal Reserve Stock)            0         0      3,472    3,504
Foreign Securities:
 Debt Securities                              0         0          0        0
 Equity Securities                            0         0          0        0
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)                                16,705    16,626     86,860   86,389

(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.

A major  goal of the  bank's  investment  portfolio  management  is to  maximize
returns from  investments  while  controlling  the basic  elements of risk.  The
second goal is to provide  liquidity and meet financial  needs of the community.
Investment  Securities  also serve as collateral for government and public funds
deposits.  The investment  portfolio,  which currently totals  $103,094,000,  is
comprised  of U.  S.  Treasury  and U. S.  Agency  Obligations  of  $82,707,000,
Municipal  Obligations  of  $13,959,000,  and  all  other  investments  totaling
$6,428,000.  Fixed rate holdings comprise 90% of the portfolio, while adjustable
rate holding comprise the remaining 10%.

The fixed rate holdings currently have an expected average life of 3.6 years. It
is estimated that this average life would extend to 6.2 years should rates go up
by 100 basis points and 6.8 years if rates increase 200 basis points.  This is a
result of some  extension  occurring in the callable  bonds and  mortgage-backed
holdings as rates rise. Should rates decline 100 basis points,  the average life
would decrease to 2.1 years.

In terms of price sensitivity,  we estimate that if rates go up 100 basis points
the market value of the portfolio  would fall by 2.3%,  while rates up 200 basis
points would impact the market  value by a negative  5.5%.  This is equal to the
price  sensitivity  of a four year Treasury bond,  which is consistent  with the
current  average  life  profile  of the  portfolio.  If rates go down 100  basis
points, we estimate that the market value would increase by 1.5%.

The  adjustable  rate holdings  reprice on an annual or more frequent  basis and
currently  have an average  life of 4.5  years.  Due to the  structure  of these
holdings,  we would expect very little extension to occur in average life should
interest  rates  rise,  but could see some  shortening  should  rates  fall.  We
estimate  that the  adjustable  rate holdings  have the price  sensitivity  of a
3-year  Treasury,  although this is more difficult to project on adjustable rate
holdings than on fixed rate holdings.


      <PAGE>37

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 will assume management of the portfolio.

As a result,  the following  changes to the  Investment  Management  Policy were
presented and approved on September 20, 2000:

1.   Safety of Principal - Insulate the  investment  portfolio from undue credit
     risk.   Investment   recommendations   will  emphasize   government  issued
     securities,   government   guaranteed   securities  and  other  high  grade
     investments.
2.   Adequate  liquidity  -  Ensure  that  adequate  liquidity  is  maintained.
     Make investments  more  liquid  than  they have been in the past.
3.   Capital at Risk - Insulate GAAP capital against  excessive  changes in
     market value which is not of the unrealizable  gain and losses of the
     investment  portfolio.  First Citizens has excessive capital on hand. A
     plan to invest additional capital is a component of the investment policy.
4.   Earnings at Risk - Insulate earnings from excessive change. First Citizens
     requires a stable  Asset/Liability  strategy to  stabilize income streams
     during times of excessive interest rate moves.
5.   Investment    Performance   -   Optimize   investment  performance   Four
     recommendations  to optimize  investment  performance  were: (a) Purchase
     securities with call  protection;  (b) concentrate  funding with growth in
     deposits;  (c) Purchase  securities with  bullet-like  features;  (d) Sell
     investments  ranging  from $2 - $3 million with five year  maturities  and
     reinvest in long term municipals.

FASB  115  required  banks  to  maintain  separate  investment   portfolios  for
Held-to-Maturity,  Available for Sale, and Trading  Account  Investments.  As of
December 31, 2000  approximately  16 percent of the bank's total  portfolio  was
placed in the  Available  For Sale  Account  while the  remaining  84 percent is
contained in the Held to Maturity Account.  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.  Mark to market  resulted  in a negative
capital  entry of $371,000 as reflected on the December 31, 2000 balance  sheet.
Mark to market impact to capital on December 31, 1999 was a negative $2,036,000.
All  purchase  and  sale  transactions  in 2000  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).

Maturities  in the  portfolio  are made up of 2.7%  within  one year,  and 37.1%
maturing after one year and within five years.  Maturities on future  investment
purchases will be structured to meet loan demand as well as projected changes in
interest rates.


      <PAGE>38

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, 2000 (in thousands):

                                  Unrealized              Net
                                Gains      Losses     Gains/Losses
U.S. Treasury Securities
 and Obligations of U.S.
 Government Agencies
  and Corporations          $   210        $1,019      $  (809)

Obligations of States
  and Political
  Subdivisions              $   308        $   88      $   220

Federal Reserve and
  Corporate Stock           $    20        $   15      $     5

TOTALS                      $   538        $1,122      $   584

LIQUIDITY AND INTEREST RATE SENSITIVITY

Liquidity  is the ability to meet the needs of our  customer  base for loans and
deposit  withdrawals  by  maintaining  assets  which  are  convertible  to  cash
equivalents with minimal  exposure to interest rate risk.  Slower deposit growth
in recent years has forced banks to seek alternative funding sources in order to
meet loan demand. First Citizens has resolved this issue by becoming a member of
the Federal Home Loan Bank and  establishing  a credit line  sufficient  to meet
liquidity needs.

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:



      <PAGE>39

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

Liquidity has been a concern through 2000 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, 2000 in
comparison to the OCC Liquidity Benchmarks.

                                                      Actual
     OCC Liquidity Benchmark                         12/31/00

Short Term Liabilities/Total Assets > 20%             23.75%

On Hand Liquidity to Total Liabilities < 8%            4.88%

Loan to Deposits < 80%                                93.67%

Wholesale Funds/Total Sources > 15%                   16.87%

Non Core Funding Dependence > 20%                     79.60%

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.


      <PAGE>40

Interest Rate Risk
December 2000
(in thousands)

Tier Capital                                       $42,894

Projected 12
   Month Exposure
Net Interest        Rate Moves    Current   Possible
   Income Levels    In Basis Pts Position  Scenarios  Variance

Declining 4                -400   $16,409  $18,684   $2,275
Declining 3                -300    16,409   18,636    2,227
Declining 2                -200    16,409   17,989    1,580
Declining 1                -100    16,409   16,426       17
Most Likely-Base           -100    16,409   16,409        0
Rising 1                    100    16,409   15,099   (1,310)
Rising 2                    200    16,409   14,281   (2,128)
Rising 3                    300    16,409   13,469   (2,940)
Rising 4                    400    16,409   12,396   (4,013)

                        Tier 1     % of Net Int     % of Net Int
                      Capital at       Income           Income
                       Risk            Actual            Policy

Declining 4             5.30%          13.86%            20.00%
Declining 3             5.19%          13.57%            20.00%
Declining 2             3.68%           9.63%            20.00%
Declining 1             0.04%           0.10%            10.00%
Most Likely-Base        0.00%           0.00%             0.00%
Rising 1               -3.05%          -7.98%           -10.00%
Rising 2               -4.96%         -12.97%           -25.00%
Rising 3               -6.85%         -17.92%           -25.00%
Rising 4               -9.36%         -24.46%           -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.



      <PAGE>41


<TABLE>
<CAPTION>
                              CONDENSED GAP REPORT
                       ------------------------------------
                                CURRENT BALANCES
                        -----------------------------------
                                    12/31/00
                                 (in thousands)

                           O/N        O/N             0-3              0-3             3-12       3-12
                           BAL       RATE        MONTHS BAL            RATE        MONTHS BAL     RATE
---------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>       <C>                    <C>          <C>             <C>
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         1,499.81             6.34             0.00        0.00
 US Agency                      0.00       0.00        18,939.99             5.28         8,242.48        6.29
 MBS                            0.00       0.00           322.63             5.83         1,045.12        5.84
 Agency                         0.00       0.00        19,262.62             5.29         9,287.60        6.24
 Municipals                     0.00       0.00           155.06             6.81         1,530.44        4.26
 Corp & Others                  0.00       0.00         2,929.62             0.00             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        23,847.11             4.71        10,818.04        5.96
 Fed Funds Sold                 0.00       0.00         4,804.11             6.00             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         4,804.11             6.00             0.00        0.00
 Commercial Variable            0.00       0.00        13,452.13             9.82         7,547.02        9.19
 Commercial Fixed               0.00       0.00         7,891.77             8.72        12,539.66        9.06
 Contra Loans - Troy            0.00       0.00             0.00             0.00             0.00        0.00
 Floor                          0.00       0.00           266.63             0.00             0.00        0.00
 Unearned                       0.00       0.00             0.00             0.00             0.00        0.00
Total Commercial                0.00       0.00        21,610.53             9.30        20,086.68        9.11
Real Estate Variable            0.00       0.00        15,935.18             9.69         7,803.01        9.94
 Real Estate Fixed              0.00       0.00        28,294.91             8.87        36,544.20        8.81
 Home Equity +1                 0.00       0.00         7,166.99            10.00             0.00        0.00
 Home Equity +2                 0.00       0.00         2,738.94            10.35             0.00        0.00
 Home Equity                    0.00       0.00         9,905.93            10.10             0.00        0.00
 Secondary Mortgage             0.00       0.00         1,199.94             8.00             0.00        0.00
Total Real Estate               0.00       0.00        55,335.95             9.31        44,347.21        9.01
Installment Variable            0.00       0.00            32.90             9.56            95.74        9.08
 Installment Fixed              0.00       0.00         4,823.99             9.95        13,592.26        9.90
 Finance Company - 78s          0.00       0.00             0.00             0.00             0.00        0.00
Total Installment               0.00       0.00         4,856.89             9.95        13,688.00        9.90
 Credit Cards                   0.00       0.00             0.00             0.00         2,554.61       12.96
 Overdrafts                     0.00       0.00           699.92             0.00             0.00        0.00
Total Other Loans               0.00       0.00           699.92             0.00         2,554.61       12.96
Total Loans                     0.00       0.00        82,503.30             9.26        80,676.50        9.31
Loan Loss Reserve               0.00       0.00             0.00             0.00             0.00        0.00
Total Net Loans                 0.00       0.00        82,503.30             9.26        80,676.50        9.31
 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       111,154.52             8.15        91,494.54        8.91

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         4,307.63        3.00
 NOW                            0.00       0.00             0.00             0.00         8,129.27        1.50
 Business                       0.00       0.00             0.00             0.00            76.81        1.50
 IMF                            0.00       0.00             0.00             0.00         3,408.39        2.00
 First Rate                     0.00       0.00             0.00             0.00         8,378.43        4.35
 Wall Street               24,624.84       5.25             0.00             0.00             0.00        0.00
 Dogwood                        0.00       0.00             0.00             0.00         2,016.05        1.50
Total Savings              24,624.84       5.25             0.00             0.00        26,316.58        2.72
 CD 1-3 Months                  0.00       0.00        22,462.25             6.33            63.76        5.61
 CD 3-6 Months                  0.00       0.00        13,493.75             6.66           114.77        6.42
 CD 6-12 Months                 0.00       0.00        15,098.15             6.13        16,566.77        6.08
 CD 13 Months                   0.00       0.00         8,663.69             5.94        13,057.03        6.10
 CD 1-2 Years                   0.00       0.00        17,596.68             5.83        53,937.82        6.48
 CD 2-5 Years                   0.00       0.00           699.84             5.26           746.16        5.41
 CD 5 + Years                   0.00       0.00           107.45             5.88           136.15        5.56
Total CD                        0.00       0.00        78,121.80             6.18        84,622.46        6.33
</TABLE>



      <PAGE>42
<TABLE>
<CAPTION>

                             CONDENSED GAP REPORT
                     ------------------------------------
                                CURRENT BALANCES
                      -----------------------------------
                                    12/31/00
                                 (in thousands)

                                       O/N       O/N        0-3        0-3           3-12          3-12
                                       BAL       RATE     MONTHS BAL    RATE      MONTHS BAL       RATE
--------------------------------------------------------------------------------------------------------
<S>                              <C>             <C>      <C>            <C>      <C>               <C>
  IRA Savings                          0.00      0.00           0.00      0.00          0.00        0.00
  IRA 1-2 Years                        0.00      0.00       4,182.74      5.72     11,003.16        6.11
  IRA 2-5 Years                        0.00      0.00          85.81      5.42        199.91        4.93
  IRA 5 + Years                        0.00      0.00         219.43      4.24        110.69        5.30
 Total IRA                             0.00      0.00       4,487.98      5.64     11,313.76        6.08
  Christmas Club                       0.00      0.00           0.00      0.00        137.12        2.50
 Total Time                            0.00      0.00      82,609.78      6.15     96,073.34        6.30
Total Deposits                    24,624.84      5.25      82,609.78      6.15    122,389.93        5.53
 Fed Funds Purchased - Bal             0.00      0.00           0.00      0.00          0.00        0.00
 Fed Funds Purchased               3,000.00      7.00           0.00      0.00          0.00        0.00
 TT & L                            1,000.00      5.60           0.00      0.00          0.00        0.00
 Securities Sold-Sweep             7,118.60      3.11           0.00      0.00          0.00        0.00
 Securities Sold - Fixed               0.00      0.00       3,469.45      5.72      4,933.18        6.60
 FHLB Short Term                  15,500.00      9.37           0.00      0.00          0.00        0.00
 FHLB Long Term Fixed                  0.00      0.00         808.00      5.66          0.00        0.00
 FHLB Libor                            0.00      0.00       1,500.00      5.75          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           0.00      0.00          0.00        0.00
 Total Borrowing                  26,618.60      7.29       5,777.45      5.72      4,933.18        6.60
 Other Liabilities                     0.00      0.00           0.00      0.00          0.00        0.00
Total Other Liabilities           26,618.60      7.29       5,777.45      5.72      4,933.18        6.60
Total Liabilities                 51,243.44      6.31      88,387.23      6.12    127,323.11        5.57

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            51,243.44      6.31      88,387.23      6.12    127,323.11        5.57

Period Gap                       (51,243.44)     0.00      22,767.29      0.00    (35,828.56)       0.00

Cumulative Gap                   (51,243.44)     0.00     (28,476.15)     0.00    (64,304.71)       0.00
RSA/RSL                                0.00      0.00           1.26      0.00          0.72        0.00

Off Balance Sheet:
 Total Off Balance Sheet               0.00      0.00           0.00      0.00          0.00        0.00

Period Gap                       (51,243.44)     0.00      22,767.29      0.00    (35,828.56)       0.00

Cumulative Gap                   (51,243.44)     0.00     (28,476.15)     0.00    (64,304.71)       0.00
RSA/RSL                                0.00      0.00           1.26      0.00          0.72        0.00
</TABLE>


      <PAGE>43
<TABLE>
<CAPTION>
                              CONDENSED GAP REPORT
                         ------------------------------------
                                CURRENT BALANCES
                         -----------------------------------
                                    12/31/00
                                (in thousands)

                                              1-3        1-3              3-5      3-5              5-10        5-10
                                             YEARS      YEARS            YEARS    YEARS             YEARS       YEARS
                                             BAL        RATE              BAL      RATE               BAL        RATE
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>              <C>          <C>             <C>       <C>               <C>
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                             26,813.79         6.08         6,462.00       6.29        7,664.45        6.23
 MBS                                    6,996.15         6.46         1,937.51       6.90        1,612.47        6.73
 Agency                                33,809.95         6.16         8,399.51       6.43        9,276.92        6.32
 Municipals                             1,949.81         4.66         1,592.12       5.00        7,689.28        4.71
 Corp & Others                              0.00         0.00             0.00       0.00            0.00        0.00
 Equities                                   0.00         0.00             0.00       0.00        3,461.80        5.50
 Unrealized G/L                             0.00         0.00             0.00       0.00            0.00        0.00
Total Investments                      35,759.76         6.08         9,991.63       6.20       20,428.00        5.57
 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                       12.23         9.50             0.00       0.00            0.00        0.00
 Commercial Fixed                      11,659.86         8.79         4,988.31       8.87          924.14        7.31
 Contra Loans - Troy                        0.00         0.00             0.00       0.00          637.00        8.50
 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                       11,672.09         8.79         4,988.31       8.87        1,561.14        7.80
Real Estate Variable                    3,362.30         9.44         1,946.83       9.01            0.00        0.00
 Real Estate Fixed                     84,598.05         8.57        48,188.39       8.23            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                      87,960.36         8.61        50,135.22       8.26            0.00        0.00
Installment Variable                       10.73         8.82            17.54       7.75            0.00        0.00
 Installment Fixed                     16,489.94         9.80         3,967.65       9.47          271.93        9.73
 Finance Company - 78s                      0.00         0.00             0.00       0.00            0.00        0.00
Total Installment                      16,500.67         9.80         3,985.18       9.46          271.93        9.73
 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                           116,133.11         8.80        59,108.71       8.39        1,833.07        8.08
Loan Loss Reserve                           0.00         0.00             0.00       0.00            0.00        0.00
Total Net Loans                       116,133.11         8.80        59,108.71       8.39        1,833.07        8.08
 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                          151,892.87         8.16        69,100.34       8.07       22,261.07        5.78

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                                8,615.27         3.00         4,307.63       3.00        4,307.63        3.00
 NOW                                   16,258.53         1.50         8,129.27       1.50        8,129.27        1.50
 Business                                 153.63         1.50            76.81       1.50           76.81        1.50
 IMF                                    3,408.39         2.00             0.00       0.00            0.00        0.00
 First Rate                             8,378.43         4.35             0.00       0.00            0.00        0.00
 Wall Street                                0.00         0.00             0.00       0.00            0.00        0.00
 Dogwood                                4,032.10         1.50         2,016.05       1.50        2,016.05        1.50
Total Savings                          40,846.35         2.44        14,529.76       1.94       14,529.76        1.94
 CD 1-3 Months                             11.96         6.50             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                           1,524.53         5.90             0.00       0.00            0.00        0.00
 CD 1-2 Years                          15,713.06         6.39             0.00       0.00            0.00        0.00
 CD 2-5 Years                           3,726.16         6.15            56.25       6.32            0.00        0.00
 CD 5 + Years                           2,199.69         5.92         1,895.85       6.10           10.02        4.75
Total CD                               23,175.40         6.28         1,952.10       6.10           10.02        4.75
</TABLE>



      <PAGE>44
<TABLE>
                              CONDENSED GAP REPORT
                        ------------------------------------
                                CURRENT BALANCES
                         -----------------------------------
                                    12/31/00
                                 (in thousands)

                                     1-3         1-3              3-5           3-5               5-10        5-10
                                    YEARS       YEARS            YEARS         YEARS             YEARS        YEARS
                                     BAL        RATE              BAL          RATE               BAL         RATE
------------------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>         <C>                <C>          <C>             <C>
  IRA Savings                        0.00        0.00             0.00          0.00              80.23      3.00
  IRA 1-2 Years                  3,260.09        6.08            28.32          5.85               0.00      0.00
  IRA 2-5 Years                  1,314.56        5.73             0.00          0.00               0.00      0.00
  IRA 5 + Years                  1,569.66        5.90         1,237.27          5.47               0.00      0.00
 Total IRA                       6,144.31        5.96         1,265.60          5.48              80.23      3.00
  Christmas Club                     0.00        0.00             0.00          0.00               0.00      0.00
 Total Time                     29,319.71        6.21         3,217.70          5.86              90.24      3.19
Total Deposits                  70,166.05        4.02        17,747.46          2.65          14,620.01      1.95
 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           152.50        6.65             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           1,929.04      5.66
 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          39,000.00      5.70
 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                  152.50        6.65             0.00          0.00          40,929.04      5.70
 Other Liabilities                   0.00        0.00             0.00          0.00               0.00      0.00
Total Other Liabilities            152.50        6.65             0.00          0.00          40,929.04      5.70
Total Liabilities               70,318.55        4.02        17,747.46          2.65          55,549.05      4.71

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          70,318.55        4.02        17,747.46          2.65          55,549.05      4.71

Period Gap                      81,574.32        0.00        51,352.89          0.00        (33,287.98)      0.00

Cumulative Gap                  17,269.61        0.00        68,622.50          0.00          35,334.52      0.00
RSA/RSL                              2.16        0.00             3.89          0.00               0.40      0.00

Off Balance Sheet:
 Total Off Balance Sheet             0.00        0.00             0.00          0.00               0.00      0.00

Period Gap                      81,574.32        0.00        51,352.89          0.00        (33,287.98)      0.00

Cumulative Gap                  17,269.61        0.00        68,622.50          0.00          35,334.52      0.00
RSA/RSL                              2.16        0.00             3.89          0.00               0.40      0.00
</TABLE>


      <PAGE>45
<TABLE>
<CAPTION>
                              CONDENSED GAP REPORT
                       ------------------------------------
                                CURRENT BALANCES
                        -----------------------------------
                                    12/31/00
                                 (in thousands)

                                   10-15       10-15           15 +        15 +            NON-
                                   YEARS       YEARS          YEARS       YEARS         SENSITIVE        TOTAL
                                    BAL         RATE            BAL        RATE             BAL           BAL
--------------------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>        <C>           <C>         <C>                <C>
Assets:
 Cash and Due From                   0.00        0.00           0.00       0.00         19,123.53         19,123.53
Total Cash and Due From              0.00        0.00           0.00       0.00         19,123.53         19,123.53
 US Treasury                         0.00        0.00         528.47       6.13              0.00          2,028.28
 US Agency                       1,343.14        6.16           0.00       0.00              0.00         69,465.85
 MBS                                 0.00        0.00           0.00       0.00              0.00         11,913.89
 Agency                          1,343.14        6.16           0.00       0.00              0.00         81,379.74
 Municipals                        848.22        4.34           0.00       0.00              0.00         13,764.93
 Corp & Others                       0.00        0.00           0.00       0.00              0.00          2,929.62
 Equities                            0.00        0.00           0.00       0.00              0.00          3,461.80
 Unrealized G/L                      0.00        0.00           0.00       0.00          (470.37)          (470.37)
Total Investments                2,191.36        5.45         528.47       6.13          (470.37)        103,094.00
 Fed Funds Sold                      0.00        0.00           0.00       0.00              0.00          4,084.11
 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          4,804.11
 Commercial Variable                 0.00        0.00           0.00       0.00              0.00         21,011.38
 Commercial Fixed                  276.95        9.53         404.28       9.51              0.00         38,684.97
 Contra Loans - Troy                 0.00        0.00           0.00       0.00              0.00            637.00
 Floor                               0.00        0.00           0.00       0.00              0.00            266.63
 Unearned                            0.00        0.00           0.00       0.00              0.00              0.00
Total Commercial                   276.95        9.53         404.28       9.51              0.00         60,599.99
Real Estate Variable                 0.00        0.00           0.00       0.00              0.00         29,047.32
 Real Estate Fixed                   0.00        0.00           0.00       0.00              0.00        197,625.55
 Home Equity +1                      0.00        0.00           0.00       0.00              0.00          7,166.99
 Home Equity +2                      0.00        0.00           0.00       0.00              0.00          2,738.94
 Home Equity                         0.00        0.00           0.00       0.00              0.00          9,905.93
 Secondary Mortgage                  0.00        0.00           0.00       0.00              0.00          1,199.94
Total Real Estate                    0.00        0.00           0.00       0.00              0.00        237,778.73
Installment Variable                 0.00        0.00           0.00       0.00              0.00            156.91
 Installment Fixed                  22.81       10.00           0.00       0.00              0.00         39,168.57
 Finance Company - 78s               0.00        0.00           0.00       0.00              0.00              0.00
Total Installment                   22.81       10.00           0.00       0.00              0.00         39,325.48
 Credit Cards                        0.00        0.00           0.00       0.00              0.00          2,554.61
 Overdrafts                          0.00        0.00           0.00       0.00              0.00            699.92
Total Other Loans                    0.00        0.00           0.00       0.00              0.00          3,254.53
Total Loans                        299.75        9.57         404.28       9.51              0.00        340,958.73


Loan Loss Reserve                    0.00        0.00           0.00       0.00        (3,763.52)        (3,763.52)
Total Net Loans                    299.75        9.57         404.28       9.51        (3,763.52)        337,195.21
 Building, Furniture & Fixtures      0.00        0.00           0.00       0.00         14,024.64         14,024.64
 Other Real Estate                   0.00        0.00           0.00       0.00            317.94            317.94
 Other Assets                        0.00        0.00           0.00       0.00         22,394.96         22,394.96
 Total Other Assets                  0.00        0.00           0.00       0.00         36,737.54         36,737.54
Total Assets                     2,491.12        5.95         932.75       7.59         51,627.18        500,954.40

Liabilities:
  Demand                             0.00        0.00           0.00       0.00         39,696.61         39,696.61
Total Demand                         0.00        0.00           0.00       0.00         39,696.61         39,696.61
 Regular                             0.00        0.00           0.00       0.00              0.00         21,538.17
 NOW                                 0.00        0.00           0.00       0.00              0.00         40,646.33
 Business                            0.00        0.00           0.00       0.00              0.00            384.07
 IMF                                 0.00        0.00           0.00       0.00              0.00          6,816.78
 First Rate                          0.00        0.00           0.00       0.00              0.00         16,756.87
 Wall Street                         0.00        0.00           0.00       0.00              0.00         24,624.84
 Dogwood                             0.00        0.00           0.00       0.00              0.00         10,080.24
Total Savings                        0.00        0.00           0.00       0.00              0.00        120,847.29
 CD 1-3 Months                       0.00        0.00           0.00       0.00              0.00         22,537.97
 CD 3-6 Months                       0.00        0.00           0.00       0.00              0.00         13,608.52
 CD 6-12 Months                      0.00        0.00           0.00       0.00              0.00         31,664.92
 CD 13 Months                        0.00        0.00           0.00       0.00              0.00         23,245.25
 CD 1-2 Years                        0.00        0.00           0.00       0.00              0.00         87,247.56
 CD 2-5 Years                        0.00        0.00           0.00       0.00              0.00          5,228.41
 CD 5 + Years                        0.00        0.00           0.00       0.00              0.00          4,349.15
Total CD                             0.00        0.00           0.00       0.00              0.00        187,881.77
</TABLE>



    <PAGE>46
<TABLE>
<CAPTION>
                              CONDENSED GAP REPORT
                          ------------------------------------
                                CURRENT BALANCES
                          -----------------------------------
                                    12/31/00
                                 (in thousands)

                                    10-15     10-15        15 +     15 +          NON-          TOTAL
                                    YEARS     YEARS        YEARS    YEARS       SENSITIVE        BAL
                                     BAL       RATE         BAL      RATE          BAL
----------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>      <C>            <C>      <C>              <C>
IRA Savings                         0.00     0.00          0.00      0.00           0.00            80.23
  IRA 1-2 Years                     0.00     0.00          0.00      0.00           0.00        18,474.32
  IRA 2-5 Years                     0.00     0.00          0.00      0.00           0.00         1,600.28
  IRA 5 + Years                     0.00     0.00          0.00      0.00           0.00         3,137.05
 Total IRA                          0.00     0.00          0.00      0.00           0.00        23,291.87
  Christmas Club                    0.00     0.00          0.00      0.00           0.00           137.12
 Total Time                         0.00     0.00          0.00      0.00           0.00       211,310.77
Total Deposits                      0.00     0.00          0.00      0.00      39,696.61       371,854.67
 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         3,000.00
 TT & L                             0.00     0.00          0.00      0.00           0.00         1,000.00
 Securities Sold-Sweep              0.00     0.00          0.00      0.00           0.00         7,118.60
 Securities Sold - Fixed            0.00     0.00          0.00      0.00           0.00         8,555.13
 FHLB Short Term                    0.00     0.00          0.00      0.00           0.00        15,500.00
 FHLB Long Term Fixed               0.00     0.00          0.00      0.00           0.00         2,737.04
 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        39,000.00
 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             0.00
 Total Borrowings                   0.00     0.00          0.00      0.00           0.00        78,410.77
 Other Liabilities                  0.00     0.00          0.00      0.00       3,799.62         3,799.62
Total Other Liabilities             0.00     0.00          0.00      0.00       3,799.62        82,210.39
Total Liabilities                   0.00     0.00          0.00      0.00      43,496.23       454,065.06


Equity:
 Retained Earnings                  0.00     0.00          0.00      0.00      25,672.12        25,672.12
 Stock, Surplus, PIC                0.00     0.00          0.00      0.00      18,973.34        18,973.34
 Unrealized Gains/(Losses)          0.00     0.00          0.00      0.00        (283.34)         (283.34)
 YTD NET INCOME                     0.00     0.00          0.00      0.00       2,527.22         2,527.22
Total Equity                        0.00     0.00          0.00      0.00      46,889.34        46,889.34

Total Liability/Equity              0.00     0.00          0.00      0.00      90,385.56       500,954.39

Period Gap                      2,491.12     0.00        932.75      0.00     (38,758.38)            0.00

Cumulative Gap                 37,825.64     0.00     38,758.39      0.00           0.00             0.00
RSA/RSL                             0.00     0.00          0.00      0.00           0.57             0.00

Off Balance Sheet:
 Total Off Balance Sheet            0.00     0.00          0.00      0.00           0.00             0.00

Period Gap                      2,491.12     0.00        932.75      0.00     (38,758.38)            0.00

Cumulative Gap                 37,825.64     0.00     38,758.39      0.00           0.00             0.00
RSA/RSL                             0.00     0.00          0.00      0.00           0.57             0.00
</TABLE>




      <PAGE>47

                              CONDENSED GAP REPORT
                        ------------------------------------
                                CURRENT BALANCES
                        -----------------------------------
                                    12/31/00
                                 (in thousands)

                                                        TOTAL
                                                        RATE
------------------------------------------------------------------------

Assets:
 Cash and Due From                                      0.00
Total Cash and Due From                                 0.00
 US Treasury                                            6.28
 US Agency                                              5.93
 MBS                                                    6.50
 Agency                                                 6.01
 Municipals                                             4.69
 Corp & Others                                          0.00
 Equities                                               5.50
 Unrealized G/L                                         0.00
Total Investments                                       5.68
 Fed Funds Sold                                         6.00
 Fed Funds Sold-Balance                                 0.00
Total Fed Funds Sold                                    6.00
 Commercial Variable                                    9.59
 Commercial Fixed                                       8.85
 Contra Loans - Troy                                    8.50
 Floor                                                  0.00
 Unearned                                               0.00
Total Commercial                                        9.06
Real Estate Variable                                    9.68
 Real Estate Fixed                                      8.58
 Home Equity +1                                        10.00
 Home Equity +2                                        10.35
 Home Equity                                           10.10
 Secondary Mortgage                                     8.00
Total Real Estate                                       8.77
Installment Variable                                    9.02
 Installlment Fixed                                     9.82
 Finance Company - 78s                                  0.00
Total Installment                                       9.82
 Credit Cards                                          12.96
 Overdrafts                                             0.00
Total Other Loans                                      10.17
Total Loans                                             8.96
Loan Loss Reserve                                       0.00
Total Net Loans                                         9.06
 Building, Furniture & Fixtures                         0.00
 Other Real Estate                                      0.00
 Other Assets                                           0.00
  Total Other Assets                                    0.00
Total Assets                                            7.32

Liabilities:
  Demand                                                0.00
Total Demand                                            0.00
 Regular                                                3.00
 NOW                                                    1.50
 Business                                               1.50
 IMF                                                    2.00
 First Rate                                             4.35
 Wall Street                                            5.25
 Dogwood                                                1.50
Total Savings                                           2.95
 CD 1-3 Months                                          6.33
 CD 3-6 Months                                          6.65
 CD 6-12 Months                                         6.10
 CD 13 Months                                           6.03
 CD 1-2 Years                                           6.33
 CD 2-5 Years                                           5.93
 CD 5 + Years                                           5.98
Total CD                                                6.26





    <PAGE>48

                              CONDENSED GAP REPORT
                        ------------------------------------
                                CURRENT BALANCES
                         -----------------------------------
                                    12/31/00
                                 (in thousands)

                                                          Total
                                                           Rate
------------------------------------------------------------------------

IRA Savings                                                  3.00
  IRA 1-2 Years                                              6.01
  IRA 2-5 Years                                              5.61
  IRA 5 + Years                                              5.59
 Total IRA                                                   5.92
  Christmas Club                                             2.50
 Total Time                                                  6.22
Total Deposits                                               4.49
 Fed Funds Purchased - Bal                                   0.00
 Fed Funds Purchased                                         7.00
 TT & L                                                      5.60
 Securities Sold-Sweep                                       3.11
 Securities Sold - Fixed                                     6.24
 FHLB Short Term                                             9.37
 FHLB Long Term Fixed                                        5.66
 FHLB Libor                                                  5.75
 FHLB Long Term-Callable                                     5.70
 Note Payable-Finance-FCNB                                   0.00
 Note Payable-Finance GE                                     0.00
 Total Borrowings                                            6.30
 Other Liabilities                                           0.00
Total Other Liabilities                                      6.01
Total Liabilities                                            4.77


Equity:
 Retained Earnings                                           0.00
 Stock, Surplus, PIC                                         0.00
 Unrealized Gains/(Losses)                                   0.00
 YTD NET INCOME                                              0.00
Total Equity                                                 0.00

Total Liability/Equity                                       4.32

Period Gap                                                   0.00

Cumulative Gap                                               0.00
RSA/RSL                                                      0.00

Off Balance Sheet:
 Total Off Balance Sheet                                     0.00

Period Gap                                                   0.00

Cumulative Gap                                               0.00
RSA/RSL                                                      0.00



      <PAGE>49

                    NOTES TO THE GAP REPORT

   1. The gap report reflects the interest sensitivity positions during a flat
      rate environment. Time frames could change depending if rates rise or
      fall.

   2. Repricing over-rides maturities in various time frames.

   3. Demand deposits, considered to be core, are placed in the last time
      frame due to lack of interest sensitivity.

   4. Savings accounts, also considered core, are placed into the 2+ year time
      frame. In a flat rate  environment,  saving accounts tend not to
      reprice or liquidate and become price sensitive only after a major
      increase in the 6 month CD rate. These accounts are placed in this
      category instead of the variable position due to history and
      characteristics.

   5. Simulations  will be  utilized  to  reflect  the impact of  multiple  rate
      scenarios on net interest  income.  Decisions should be made that increase
      net interest income,  while always considering the impact on interest rate
      risk. Overall,  the bank will manage the gap between rate sensitive assets
      and rate sensitive  liabilities to expand and contract with the rate cycle
      phase. Approximately 20% - 30% of CD customers have maturities of 6 months
      or less.  First  Citizens  will attempt to minimize  interest rate risk by
      increasing  the volume of variable  rate loans within the  portfolio.  The
      bank's  Asset/Liability  Committee  will  attempt to improve net  interest
      income through volume increases and better pricing  techniques.  Long term
      fixed rate positions will be held to a minimum by increasing variable rate
      loans. The over 5 year fixed rate loans should be held to less than 25% of
      assets,  unless they are funded with Federal Home Loan Bank matched funds.
      These maximum  limits are the high points and the ACLO will strive to keep
      the amount below this point.

      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.

6.    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.
                                    2000    1999    1998    1997    1996
Percentage of Net Income to:
Average Total Assets                 .95%  1.22%   1.02%   1.26%   1.16%
Average Shareholders Equity        10.16% 13.27%   11.22%  14.15%  13.39%
Percentage of Dividends Declared
 Per Common Share to Net Income
 Per Common Share                  81.09% 58.35%   57.51%  35.78%  32.28%
Percentage of Average Shareholders'
 Equity to Average Total Assets     9.36%  9.24%    9.85%   9.71%   9.34%


      <PAGE>50

Return on assets is a measurement of the firms  profitability  in terms of asset
utilization.  Total  assets at  December  31, 2000 was  $500,954,000  up 6% when
compared to $472,670,000 at December 31, 1999. The balance sheet,  however,  was
restated as required by the Financial  Accounting  Standards  Board to reflect a
more accurate  comparison of prior year(s) financial  information.  The restated
balance  sheet  reflected  asset  growth  of  less  than  one  percent.  Further
discussion may be referenced in the section titled Earnings  Analysis on page 17
of this  document.  Return on assets at year end 2000 was .95% compared to 1.22%
and 1.02% at years ending December 31, 1999 and 1998 respectively. The return on
assets  calculation  for 1998 is reflective  of  acquisition  and  non-recurring
organization  cost in excess of $1.3 million  associated  with the Bank of Troy.
Performance  ratios  at the  bank  level  were  less  impacted  as a  result  of
acquisition  cost dealt with at the  Holding  Company  level.  Adjustments  were
recognized  to  strengthen  future  income  potential  and  justify  the capital
investment  in Bank of Troy and First  Volunteer.  Efforts  continue to focus on
positioning the company for future growth and profitability through improvements
in technology, solid growth in the deposit base and efficient utilization of the
branch  distribution  system.  Results of  operations  for 1997 and 1996 reflect
improvement over previous years as a result of the decision.

The primary  source of earnings  for  Bancshares  continues  to be net  interest
income.  Interest  income  increased  $2,052,000,  a 5.7% increase over the same
period in 1999.  An increase  of 16.5% in  interest  expense for the same period
reflects the increased costs of funding brought about by an accumulated increase
of 175 basis  points in overnight  borrowing  rates and resulted in a decline of
3.9% in net interest  income.  Other income was up 9.2%,  offsetting to a degree
the decline in net interest income.

Yields on interest earning assets, i.e. loans and investments, were 8.87%, 8.48%
and 8.98% for 2000, 1999 and 1998  respectively  while cost on interest  bearing
liabilities  were  4.93%,  4.36% and 4.86%  resulting  in net  yields on average
earning assets of 4.36%, 4.57% and 4.63% for the years under comparison.

Reduced funding cost is attributable to utilization of Federal Home Loan Bank as
an alternative  source of funds.  As a result,  we are better able to manage the
cost of funds and restore net interest margins to a more acceptable level.

The return on average assets of First Citizens National Bank was .95%, 1.22% and
1.02%  respectively  for 2000, 1999 and 1998.  Return on average equity was also
impacted by contract  payouts to two  management  level  employees  in 2000 as a
result of the Bank of Troy and First Volunteer  acquisitions in 1998.  Return on
average equity reported by the Bank was 10.16%, 13.27%, and 11.22% for the years
ending December 31, 2000, 1999 and 1998.

The company's strategic plan addresses  objectives to sustain improved earnings,
maintain a quality loan and investment portfolio,  seek fee income opportunities
and to maintain market share by providing quality customer  service.  The Bank's
management and employees are rewarded with incentive  compensation  based on the
level of ROA  achieved  at year end.  The  incentive  program  is in place  that
challenges the staff by offering  incrementally  increased incentives based on a
return on assets up to 2%.

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.

    2000     1999      1998    1997    1996

    9.35%    9.24%    9.12%   9.74%   9.26%



      <PAGE>51

Quarterly  dividends  of $.2250  per  share  paid to  shareholders  in 2000 were
enhanced by a special dividend of $.10 per share declared during fourth quarter.
This process  utilized in the past five years  serves to raise payout  ratios to
levels  targeted  by the bank's  capital  plan.  In 1998,  a 4 for 1 stock split
distributed the number of shares outstanding to 3,194,544. This action follows a
2.5 for 1 stock split October 15, 1993 and a 10% stock dividend December,  1992.
Dividend  payouts per share  adjusted for the 1998 split were .75 cents in 1998,
 .50 cents in 1997 and .40 cents in 1996.

In 2000,  per share price of banks  stocks  continued to  experience  tremendous
pressure.  Because  Bancshares  stock is not publicly  traded,  it has initially
escaped the level of  volatility  that  impacted  stock  prices of even the best
performing  banks.  Uncertainty  of the future  direction of interest  rates,  a
decrease in merger and acquisition  activity and a leveling off of earnings have
combined to dampen the  enthusiasm  of  investors  and create an unstable  stock
market.  Bancshares  stock traded at $30.00 per share through December 31, 1999.
However,  first  quarter  2000,  the common stock traded at a per share price of
$24.00  reflecting the trend in bank stocks  industry wide. This trend continued
with common  stock  trading at a per share price of $19.00  throughout  the last
three quarters of 2000.  Book value  increased  6.85% to $12.62 at year-end 2000
from $11.81 as of December 31, 1999.  Unusual items occurring in 2000 negatively
impacted book value $(.23).  Extraction of these items  reflects a book value of
$12.85.  Book value fell from $12.12 at  year-end  1998 to $11.81 as of December
31, 1999,  as a direct result of FASB 115. FASB 115, Mark to Market is discussed
within the Investment section of the report.

A stock  repurchase  program,  approved by the Board of Directors  May 17, 2000,
provides for the  repurchase of  outstanding  shares of  Bancshares'  stock on a
first come,  first served basis,  within the  guidelines  of Generally  Accepted
Accounting  Principles,  which  limits  the  number  of  shares  a  company  may
repurchase  for a two year period  following a pooling of interest  transaction.
The  limitations  of GAAP ceased to apply on January 1, 2001,  at which time the
company began  actively  repurchasing  outstanding  shares when  available.  The
limitation is a result of FASB  Accounting  rules for  pooling-of-interest  that
states Bancshares is limited to the purchase of Bancshares stock equal to 10% of
the  original  issued  quantity of shares  (445,251)  for the  purchase of First
Volunteer Bank.

In 1998,  the Employee  Stock  Ownership Plan entered into a loan agreement with
SunTrust  Bank in the amount of  $2,000,000  to fund the  purchase  of  unissued
stock.  The  stock  will be  utilized  to  satisfy  future  allocations  to plan
participants  in  accordance  with the plan  document  approved  by the Board of
Directors.  The balance  remaining  on the ESOP loan is $920,000 at December 31,
2000.

The  purchase  of Bank of Troy in 1998 was  funded in part by  existing  capital
totaling $5.5 million.

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.

Bancshares  has  historically  maintained  capital in excess of  minimum  levels
established by the Federal Reserve.  The risk-based capital ratio for Bancshares
as  of  December   31,  2000  and  December  31,  1999  was  13.78%  and  13.59%
respectively,  significantly above the 8.0 percent level required by regulation.
With the exception of the Reserve for Loan and Lease Losses, all capital is Tier
1 level.  Growth in capital will be maintained through retained earnings.  There
is no reason to assume that income  levels will not be sufficient to maintain an
adequate  capital  ratio.  Ten percent is used as a benchmark for a well defined
capitalized bank.



      <PAGE>52

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA



                      CARMICHAEL, DUNN, CRESWELL & SPARKS PLLC

                            Certified 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, 2000 and 1999, and the
related consolidated statements of income,  comprehensive income,  stockholders'
equity,  and cash flows for each of the three years  ended  December  31,  2000.
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  generally   accepted  auditing
standards.  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, 2000 and 1999, and their results of
operations  and cash flows for the three  years  ended  December  31,  2000,  in
conformity with generally accepted accounting principles.



Dyersburg, Tennessee
January 25, 2001



      <PAGE>53
                                               FIRST CITIZENS BANCSHARES, INC.,
                                                        AND SUBSIDIARY
                                                 CONSOLIDATED BALANCE SHEETS
                                                  December 31, 2000 and 1999
                                                  2000                   1999
                                                  ----                   ----
                                                         (In thousands)
                       ASSETS

Cash and due from banks                        $ 19,123               $ 17,410
Federal funds sold                                4,804

Investment securities
 Securities held-to-maturity
  (fair value of $16,626 At December 31,
   2000 and $19,768 at December 31, 1999)        16,705                 20,345
 Securities available-for-sale, at fair value    86,389                 78,792

Loans (net of unearned income of
      $2,825 in 2000 and $2,131 in 1999)        340,959                325,377
      Less:  Allowance for loan losses            3,763                  3,718
                                        ----------------    ------------------
          Net Loans                             337,196                321,659

Premises and equipment, net                      14,024                 13,417
Accrued interest receivable                       5,596                  5,353
Intangible assets                                 3,959                  5,223
Other assets                                     13,158                 10,471
                                        ----------------   -------------------

          TOTAL ASSETS                   $      500,954         $      472,670
                                       =================    ===================

               LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
      Demand                            $        39,696        $        42,513
      Time                                      211,311                209,835
      Savings                                   120,847                114,471
                                     -------------------    -------------------
       Total Deposits                           371,854                366,819
Securities sold under agreement
  to repurchase                                  15,674                 22,390
Long-term debt                                   43,429                 11,264
Federal funds purchased and
  short-term borrowings                          18,500                 23,700
Note payable of Employee Stock
  Ownership Plan                                    808                  1,117
Other liabilities
                                                  3,800                  3,700
                                              ---------              ---------
       Total Liabilities                        454,065                428,990
                                              ---------              ---------
Stockholders' Equity
Common stock, no par value
      Shares authorized - 10,000,000;
      Issued-3,717,593 in 2000;
          3,705,165 in 1999                       3,718                  3,705
Surplus                                          15,302                 15,034
Retained earnings                                29,095                 28,298
Accumulated other comprehensive income             (371)                (2,036)
Less treasury stock, at cost-2,382
 shares in 2000 and 6,807 shares in 1999            (47)                  (204)
Obligation of Employee Stock Ownership Plan        (808)                (1,117)
                                              ----------          -------------
      Total Stockholders' Equity                 46,889                 43,680
                                              ----------          -------------

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $  500,954           $    472,670
                                             ===========          =============


 See   accompanying    notes   to   consolidated financial statements.



      <PAGE>54

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years Ended December 31, 2000, 1999, and 1998

                               2000                1999                1998
                               ----                ----                ----
                                ( In thousands except per share data)
Interest Income
Interest and fees on loans    $ 31,631           $  29,382          $   28,502
Interest and dividends on
  investment securities:
      Taxable                    5,496               5,582               5,149
      Tax-exempt                   633                 610                 651
      Dividends                    236                 321                 256
Other interest income              141                 190                 694
                              --------          -----------         ----------
    Total Interest Income       38,137              36,085              35,252
                              --------          -----------         ----------
Interest Expense
Interest on deposits            15,664              13,586              14,791
Interest on long-term debt       2,435                 672               1,486
Other interest expense           1,444               2,522               1,011
                               -------          -----------         ----------
  Total Interest Expense        19,543              16,780              17,288
                              --------          -----------         ----------
Net Interest Income             18,594              19,305              17,964
Provision for loan losses        1,411                 720               1,226
                              --------          -----------         ----------
Net interest income after
 provision for loan losses      17,183              18,585              16,738
                              --------          -----------         ----------
Other Income
Income from fiduciary
  activities                       883                 921                 827
Service charges on
 deposit accounts                2,711               2,408               2,077
Other service charges,
 commissions, and fees           1,881               1,657               1,113
Securities gains (losses)
  - net                            (20)                 93                  61
Other income                       617                 592                 511
                               --------          ----------          ----------
    Total Other Income           6,072               5,671               4,589
                               --------          ----------          ----------

Other Expenses
Salaries and employee
 benefits                        8,751               8,672               8,288
Net occupancy expense            1,058               1,028                 917
Depreciation                     1,431               1,262               1,103
Data processing expense            449                 436                 395
Legal and professional fees         98                 139                 272
Stationary and office supplies     229                 291                 243
Amortization of intangibles        320                 351                 183
Executive payments                 809
Other expenses                   3,501               3,230               3,242
                              --------           ---------           ---------
   Total Other Expenses         16,646              15,409              14,643
                              --------           ---------           ---------

  See accompanying  notes  to  consolidated financial statements.





      <PAGE>55

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                  CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
                  Years Ended December 31, 2000, 1999, and 1998

                                    2000               1999              1998
                                    ----               ----              ----
                                      ( In thousands except per share data)

Net income before income taxes      $ 6,609         $     8,847        $  6,684

Provision for income tax expense      1,997               3,048           2,210
                                    -------         -----------       ---------

Net Income                          $ 4,612         $     5,799        $  4,474
                                    =======         ===========       =========

Earnings Per Common Share:

      Net income                    $  1.24         $     1.58         $   1.25
                                    =======         ==========         ========

Weighted average shares outstanding
                                      3,709              3,664            3,590
                                    =======         ==========         ========






















      See  accompanying   notes  to   consolidated financial statements.







      <PAGE>56


                                      FIRST CITIZENS BANCSHARES, INC.,
                                               AND SUBSIDIARY
                              CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                               Years Ended December 31, 2000, 1999, and 1998

                                   2000              1999              1998
                                   ----              ----              ----
                                               (In thousands)

Net income for year              $  4,612          $  5,799          $  4,474

 Other comprehensive income,
   net of tax
  Unrealized gains (losses)
   on available -
 For-sale securities:
 Unrealized gains (losses)
  arising during the period         1,665           (2,491)               174

                                  --------         ---------        ---------

   Total Comprehensive Income    $  6,277          $  3,308          $  4,648
                                 ========          ========         =========


Required disclosures of related
tax effects allocated to each
component of other
comprehensive Income.



                                     Before-tax   Tax (Expense)    Net-of-tax
                                      Amount       or Benefit        Amount
 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 losses 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)
                                     ========        ========         =========

Year ended December 31, 1998

Unrealized gains (losses) on
 available-for-sale securities:
Unrealized gains (losses) arising
 during the period                   $   300         $   (120)         $   180
Less reclassification adjustments
 for gains included in net income        (11)               5               (6)
                                     --------        ---------         --------
Net Unrealized Gains (Losses)        $   289         $   (115)         $   174
                                     ========        =========         ========




      <PAGE>57
<TABLE>
<CAPTION>
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 2000, 1999 and 1998
                  --------------------------------------------
                      (in thousands except per share data)


                                                   Common Stock

                                                                                    Retained
                                                Shares     Amount       Surplus     Earnings
                                                ------     ------       -------     --------
<S>                                             <C>     <C>           <C>          <C>
Balance, January 1, 1998                        1,196   $  1,196      $ 11,369     $  23,839

Net income, year ended December 31, 1998                                               4,474

Adjustment of unrealized  gain (loss)
on securities  available-for-sale,  net of
applicable deferred income taxes ($115)
during the year

Cash dividends paid - $.75 per share                                                  (2,430)

Sale of common stock                             348         348         5,354

Adjustments to par value of common stock       2,146       2,146        (5,354)
Treasury stock transaction-net
                                            ---------   ---------     ---------     ---------
Balance, December 31, 1998                     3,690       3,690        14,591        25,883

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

Cash dividends paid - $.90 per share                                                  (3,384)

Sale of common stock                              15          15           435

Treasury stock transactions - net                                            8

Principal payments - ESOP
                                           ---------    --------     ----------     --------
Balance, December 31, 1999                     3,705       3,705        15,034        28,298

Net income, year ended December 31, 2000                                               4,612

Adjustment of record unrealized gain(loss)
on securities available-for-sale, net
of applicable deferred income taxes ($1,110)
during the year

Cash dividends paid - $1.00 per share                                                 (3,741)

Sale of common stock                              13         13            287

Treasury stock transactions-net                                            (19)

Principal payments - ESOP

Unrealized loss - derivatives

Prior period adjustment of unearned
 Interest, net of tax
                                           ---------   ---------     ----------   ----------

Balance, December 31, 2000                     3,718  $   3,718     $   15,302    $   29,095
                                           =========  =========     ==========    ==========

</TABLE>
     See accompanying notes to consolidated financial statements.




      <PAGE>58
<TABLE>
<CAPTION>

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 2000, 1999 and 1998
                  --------------------------------------------
                      (in thousands except per share data)



                                                                       Obligation
                                             Accumulated               Of Employee
                                               Other                     Stock         Total
                                             Comprehensive             Ownership
Shareholder's                                                Income   Treasury Stock   Plan
   Equity                                                    ------   --------------   ----
   -----
<S>                                           <C>        <C>           <C>         <C>
Balance, January 1, 1998                      $  281     $     (7)     $      0    $  36,678

Net income, year ended December 31, 1998                                               4,474

Adjustment of unrealized gain (loss) on
 securities available-for-sale, net of
 applicable deferred income taxes ($115)
 during the year                                 174                                     174

Cash dividends paid - $.75 per share
                                                                                      (2,430)

Sale of common stock                                                                   5,702

Adjustments to par value of common stock                       (3)                        (6)

Loan proceeds - ESOP obligation                                         (2,000)       (2,000)

Principal payments - ESOP                                                  592           592

Treasury stock transaction-net                               (119)                      (102)
                                              -------   ----------    ---------     ---------
Balance, December 31, 1998                       455         (129)      (1,408)       43,082

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)                                 (2,491)

Cash dividends paid - $.90 per share                                                  (3,384)

Sale of common stock                                                                     450

Treasury stock transactions - net                            (75)                        (67)

Principal payments - ESOP                                                 291            291
                                            ---------   --------     ---------      ---------
Balance, December 31, 1999                    (2,036)       (204)      (1,117)        43,680

Net income, year ended December 31, 2000                                               4,612

Adjustment of record unrealized gain(loss)
 on securities available-for-sale, net of
 applicable deferred income taxes ($1,110)
 during the year                               1,753                                   1,753

Cash dividends paid - $1.00 per share                                                 (3,741)

Sale of common stock                                                                     300

Treasury stock transactions-net                              157                         138

Principal payments - ESOP                                                 309            309

Unrealized loss - derivatives                    (88)                                    (88)

Prior period adjustment of unearned
 Interest, net of tax                                                                    (74)
                                            ---------   ---------   ----------    -----------
Balance, December 31, 2000                  $   (371)   $    (47)   $    (808)    $   46,889
                                            ========    ========    =========     ==========
</TABLE>

   See accompanying notes to consolidated financial statements.




    <PAGE>59
<TABLE>
<CAPTION>

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 2000, 1999, and 1998

                                                      2000                1999                 1998
                                                      ----                ----                 ----
                                                                      (In thousands)
<S>                                                 <C>               <C>                   <C>
Operating Activities
 Net income                                         $  4,612          $   5,799             $  4,474
 Adjustments to reconcile net income to net
   Cash provided by operating activities:
    Provision for loan losses                          1,411                720                1,226

    Provision for depreciation                         1,431              1,262                1,103
    Provision for amortization-intangibles               320                351                  183
    Deferred income taxes                                921             (1,032)                (230)
    Gain on sale of other real estate                                                             (3)
    Realized investment
    Security (gains) losses                               20                (93)                 (61)
    Increase in accrued
      Interest receivable                               (243)              (158)                (984)
    Increase (decrease) in accrued
      Interest payable                                   480               (365)                 130
    Increase in other assets                          (2,738)            (2,192)              (6,577)
    Increase (decrease) in other liabilities            (380)               694                 (353)
                                                    ---------         ----------             --------

     NET CASH PROVIDED (USED) BY
       OPERATING ACTIVITIES                            5,834              4,986              (1,092)
                                                    --------          ----------            ---------

 Investing Activities
 Proceeds of maturities of held-to-maturity
   Investment securities                               3,640              7,866               15,625
 Purchases of held-to-maturity investment
  securities                                                             (2,500)             (19,757)
 Proceeds of sales and maturities of
  available-for-sale investment securities             7,213             15,800               10,294
 Purchases of available-for-sale investment
  securities                                         (13,165)           (12,971)             (38,188)
 Increase in loans - net                             (16,948)           (18,920)             (45,432)
 Proceeds from sale of other real estate                                                          31
 Purchase of premises and equipment                   (2,038)            (3,451)              (2,736)
                                                    ---------         ----------           ---------
     NET CASH USED BY
      INVESTING ACTIVITIES                           (21,298)           (14,176)             (80,163)
                                                    ---------         ----------           ----------
</TABLE>






               See accompanying notes to consolidated financial statements.





     <PAGE>60
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                  Years Ended December 31, 2000, 1999, and 1998

                                         2000           1999             1998
                                         ----           ----             ----
                                                  (In thousands)
 Financing Activities
 Net increase (decrease) in
  demand deposits, NOW accounts,
  and savings accounts                 $  3,559     $  (4,765)    $    30,608
 Increase in time deposits - net          1,476        10,885          20,116

 Increase in long-term borrowing         32,165                        23,116
 Payment of principal on long-term debt               (14,222)         (9,776)
 Proceeds from sale of common stock         300           450           4,335
 Cash dividends paid                     (3,741)       (3,384)         (2,430)
 Net increase (decrease) in short-term
       Borrowings                       (11,916)        7,983          16,341
 Treasury stock transactions - net          138           (67)           (102)
                                     -----------    ----------   --------------

    NET CASH PROVIDED (USED) BY
        FINANCING ACTIVITIES             21,981        (3,120)         82,208
                                     ----------     ----------   --------------

INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                        6,517       (12,310)            953


Cash and cash equivalents at
  beginning of year                      17,410        29,720          28,767
                                     ----------    ----------    -------------

CASH AND CASH EQUIVALENTS
  AT END OF YEAR                     $   23,927    $  17,410     $     29,720
                                     ==========    =========     =============

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

  Interest                           $   19,063    $  17,145     $     17,152
                                     ==========    =========     =============
  Income taxes                       $    2,337    $   2,400     $      2,428
                                     ==========    =========     =============














             See accompanying notes to consolidated financial statements.





      <PAGE>61
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

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, 1998, in a transaction  accounted for as a
purchase,  and therefore,  operations of Bank of Troy from March 5, 1998 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 require 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.






      <PAGE>62

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 1 - Summary of Significant Accounting and Reporting Policies (Continued)

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.



      <PAGE>63

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 1 - Summary of Significant Accounting and Reporting Policies (Continued)

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:





      <PAGE>64
                                              December 31, 2000
                                              Held-To-Maturity
                          ----------------------------------------------------
                          ----------------------------------------------------
                                          Gross        Gross
                           Amortized    Unrealized   Unrealized
                             Cost         Gains        Losses       Fair Value
                                               (In thousands)
U.S. Treasury securities
 and obligations of U.S.
 government corporations
 and agencies            $    15,050    $       11    $      116    $   14,945

Obligations of states
 and political
 subdivisions                  1,632            27             1         1,658

Mortgage-backed
 securities                       23                                        23
                         ------------  ------------   -----------   ----------

TOTAL SECURITIES
  INVESTMENTS            $    16,705   $        38    $      117    $   16,626
                         ============  ============   ===========   ==========






      <PAGE>65
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


Note 2 - Investment Securities (Continued)
                                             December 31, 2000
                                             Available-for-Sale
                       -------------------------------------------------------
                       -------------------------------------------------------
                                          Gross        Gross
                           Amortized    Unrealized   Unrealized
                             Cost         Gains        Losses       Fair Value
                                               (In thousands)

U.S. Treasury securities
 and obligations of U.S.
 government corporations
 and agencies              $  56,525    $      145   $     737     $    55,933


Obligations of states
 and political
 subdivisions                 12,069           281          87          12,263

Mortgage-backed securities    11,885            54         133          11,806

Corporate debt securities      2,920            20          15           2,925
                           ---------     ----------  ---------   -------------

 Total Debt Securities        83,399           500         972          82,927

Equity investments             3,462                                     3,462
                           ---------     ---------- -----------  -------------
 TOTAL SECURITIES
   INVESTMENTS            $   86,861    $      500  $      972   $      86,389
                          ==========    ==========  ==========   =============

                                                December 31, 1999
                                                Held-To-Maturity
                            ---------------------------------------------------
                            ---------------------------------------------------
                                          Gross        Gross
                           Amortized    Unrealized   Unrealized
                             Cost         Gains        Losses       Fair Value
                                               (In thousands)

U.S. Treasury securities
 and obligations of U.S.
 government corporations
 and agencies               $  16,984   $            $      476    $    16,508

Obligations of states
and political
subdivisions                    3,282           4           106          3,180

Mortgage-backed securities         79           1                           80
                            ---------  ----------   ------------   -----------

TOTAL SECURITIES
 INVESTMENTS                $  20,345  $        5   $       582    $    19,768
                            =========  ==========   ===========   ============










      <PAGE>66
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 2 - Investment Securities (Continued)
                                            December 31, 1999
                                           Available-for-Sale
                       -------------------------------------------------------
                       -------------------------------------------------------
                                          Gross        Gross
                           Amortized    Unrealized   Unrealized
                             Cost         Gains        Losses      Fair Value
                                               (In thousands)
U.S. Treasury securities
 and obligations of U.S.
 government corporations
 and agencies              $  57,880    $      61   $    2,775    $     55,166

Obligations of states
 and political
 subdivisions                  9,557            7          331           9,233

Mortgage-backed
  securities                  11,511           21          389          11,143
                           ---------    ---------- -----------    ------------
 Total Debt Securities        78,948           89        3,495          75,542

Equity investments             3,223           27                        3,250
                           ---------    ---------- ------------   ------------
 TOTAL SECURITIES
   INVESTMENTS             $  82,171    $     116  $     3,495    $     78,792
                           =========    =========  ============   ============


The tables below summarize  maturities of debt securities  held-to-maturity and
available-for-sale as of December 31, 2000 and 1999:

                                            December 31, 2000
                              Securities                        Securities
                          Held-To-Maturity                  Available-For-Sale
                         -----------------------------------------------------
                         -----------------------------------------------------
                              Amortized      Fair         Amortized     Fair
                                Cost         Value          Cost        Value
                                                (In thousands)
Amounts Maturing In:
One Year or less             $       78   $     78       $   2,671    $  2,667

After one year
  through five years             15,647     15,542          22,722      22,649

After five years
  through ten years                 980      1,006          34,002      33,870

After ten years                                             24,004      23,741
                             ----------   --------       ----------  ---------
                             $   16,705   $ 16,626       $  83,399   $  82,927
                             ==========   ========       ==========  =========


                                            December 31, 1999
                              Securities                        Securities
                          Held-To-Maturity                  Available-For-Sale
                         -----------------------------------------------------
                         -----------------------------------------------------
                              Amortized      Fair         Amortized     Fair
                                Cost         Value          Cost        Value
                                                (In thousands)

Amounts Maturing In:
One Year or less             $   16,233    $  15,770     $   43,152    $ 41,191

After one year through
 five years                       2,603        2,584         17,537      16,991

After five years through
 ten years                        1,334        1,239          9,579       9,225

After ten years                     175          175          8,680       8,135
                             ----------    ---------     ----------    --------
                             $   20,345    $  19,768     $   78,948    $ 75,542
                             ==========    =========     ==========    ========

 <PAGE>67
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 2 - Investment Securities (Continued)

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

 Year Ended December 31                 Gross Sales Gains Losses  Net
                                        ----------- ----- ------  ---
                                               (In thousands)

 2000 - Securities held to maturity      $ 3,375    $   0  $ 20   $ (20)
 2000 - Securities available-for-sale          0        0     0       0
 1999 - Securities held-to-maturity          998        1     2      (1)
 1999 - Securities available-for-sale      6,353       96     2      94
 1998 - Securities held-to-maturity       15,558       82    57      25
 1998 - Securities available-for-sale     10,425       36            36


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.

At December  31, 2000 and 1999,  investment  securities  were  pledged to secure
government, public and trust deposits as follows:

                 December 31       Amortized Cost           Fair Value
                                  (In thousands)

                     2000           $ 79,517                $ 79,435
                     1999             86,762                  83,312

At December 31, 2000,  Nevada  Investments  II, Inc.  has  unrealized  losses on
securities   available-for-sale  totaling  $471,669,  resulting  in  a  negative
accumulated other comprehensive income in the amount of $283,001.

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.








      <PAGE>68
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 2 - Investment Securities (Continued)

During the year, the value of the derivative decreased by $147,000 due to market
interest rate fluctuations, resulting in a negative other compre- hensive income
of $88,000,  which is reflected in  accumulated  other  comprehensive  income at
December 31, 2000.


Note 3 - Loans

Loans  outstanding  at  December  31,  2000  and  1999,  were  comprised  of the
following:

                                                 2000                1999
                                                 ----                ----
                                                       (In thousands)

Commercial, Financial and Agricultural     $      63,703       $      60,446
Real estate - construction                        34,195              34,431
Real estate - mortgage                           197,040             189,787
Installment                                       42,754              37,595
Other loans                                        3,267               3,118
                                           -------------      ----------------
                                                 340,959             325,377
Less:  Allowance for loan losses                   3,763               3,718
                                           -------------      ----------------

             Net Loans                     $     337,196       $     321,659
                                           =============       ==============

In  conformity  with  Statement No. 114 of the  Financial  Accounting  Standards
Board,  the Corporation has recognized  loans with carrying values of $2,267,000
at December 31, 2000, and $872,000 at December 31, 1999, as being impaired.  The
balance  maintained in the Allowance for Loan Losses  related to these loans was
$1,021,167  at December  31, 2000,  and  $157,623 at December  31,  1999.  As of
December  31, 2000,  loans  totaling  $1,984,000  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:

                                                  2000      1999         1998
                                                  ----      ----         ----
                                                       (In thousands)

  Balance - beginning of period                 $  3,718   $  3,872  $  3,122

Provision for loan losses charged to operations    1,411        720     1,226

Loans charged to allowance, net of loan loss
 Recoveries of $335,139, $308,669, and 324,521    (1,366)      (874)     (846)
Addition incident to merger                                               370
                                                ---------  --------- ----------
Balance - end of period                        $   3,763   $  3,718  $  3,872
                                               ==========  ========  =========

For tax purposes,  the Corporation deducts the maximum amount allowable.  During
the year ended  December 31,  2000,  the  deduction  taken was  $1,820,429.  The
deductions  for tax  purposes  in 1999  and 1998  were  $681,563  and  $479,396,
respectively.










      <PAGE>69
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


Note 5 - Premises and Equipment

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

                              Useful Lives
                               in Years             2000                1999
                               --------             ----                ----
                                                          (In thousands)

Land                                              $   1,684           $  1,653
Buildings                      5 to 50               13,659             12,425
Furniture and equipment        3 to 20               10,819             10,341
                                                  ---------           --------
                                                     26,162             24,419
Less:  Accumulated depreciation                      12,138             11,002
                                                  ---------           --------
            Net Fixed Assets                      $  14,024           $ 13,417
                                                  =========           ========




Note 6 - Repossessed Real Property

The carrying  value of  repossessed  real property on the balance  sheets of the
Corporation is $324,238 at December 31, 2000, and $390,458 at December 31, 1999.
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:

                                  2000                   1999
                                  ----                   ----
                                         (In thousands)

Time Deposits                    $73,101                $70,862
Savings Deposits                  49,365                 53,516

NOW  accounts,  included  in savings  deposits on the  balance  sheets,  totaled
$40,646,326 at December 31, 2000, and $40,365,018 at December 31, 1999.

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, 2000 and 1999,  were  $8,858,253 and
$5,726,010, respectively.

Time deposits maturing in years subsequent to December 31, 2000 are as follows:

                                                        (In thousands)

        One year or less                                   $178,683
        After one year through three years                   29,320
        After three years through five years                  3,218
        After five years                                         90
                                                           --------
        Total                                              $211,311
                                                           ========




      <PAGE>70
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


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 2000, 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  $629,820 in 2000,  $610,718  in 1999,  and
$565,557 in 1998.

Note 9 - Income Taxes

Provision for income taxes is comprised of the following:
                                         2000          1999             1998
                                         ----          ----             ----
Federal income tax expense (benefit)               (In thousands)
  Current                               $1,555        $2,530           $2,002
  Deferred                                 210           (26)            (196)

State income tax expense (benefit)
  Current                                  193           511              438
  Deferred                                  39            33              (34)
                                        ------        ------           -------

                                        $1,997        $3,048           $2,210
                                        ======        ======           ======

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:

                                         2000          1999              1998
                                         ----          ----              ----
                                                   (In thousands)
Tax expense at statutory rate           $2,247        $3,008           $2,272
Increase (decrease) resulting from:
  State income taxes, net of federal
    income tax benefit                     152           359              265
Tax exempt income                         (215)         (435)            (190)
Effect of life insurance                  (115)         (168)             (80)
Amortization of goodwill                   123           124               75
Other items                               (195)          160             (132)
                                        -------        ------           ------

                                        $1,997        $3,048           $2,210
                                        ======        ======           ======

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:

                                                 December 31
                                              2000         1999
                                              ----         ----
                                                (In thousands)
Deferred tax liabilities                      $           $ (568)
Deferred tax assets                             435        2,612
                                              -----       ------

Net deferred tax assets                       $ 435       $2,044
                                              =====       ======






         <PAGE>71
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

    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,  2000,  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 institution's category.
<TABLE>
<CAPTION>
                                                                                                     To Be Well
                                                                                                 Capitalized Under
                                                                    For Capital                  Prompt Corrective
    (In thousands)                        Actual                 Adequacy Purposes               Action Provisions
    Amount                                Amount      Ratio           Amount           Ratio          Amount                Ratio
    ------                                ------      -----           ------           -----          ------                -----
    <S>                                   <C>         <C>             <C>         <C>   <C>           <C>            <C>   <C>
    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 I Capital
      (To Risk Weighted Assets)            42,894     12.67%           13,546     >     4.0%           20,319         >     6.0%
                                                                                  -                                   -
    Tier I Capital
      (To Average Assets)                  42,894      8.76%           19,594     >     4.0%           24,492         >     5.0%
                                                                                  -                                   -

    As of December 31, 1999:
    Total Risk-Based Capital
      (To Risk Weighted Assets)           $47,788     14.74%          $25,943     >     8.0%          $32,249         >     10.0%
                                                                                  -                                   -
    Tier I Capital
      (To Risk Weighted Assets)            41,884     12.91%           12,972     >     4.0%           19,457         >      6.0%
                                                                                  -                                   -
    Tier I Capital
      (To Average Assets)                  41,884       8.91%          18,803     >     4.0%           23,504         >      5.0%
                                                                                  -                                   -
</TABLE>




      <PAGE>72
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


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 2000 and 1999 were
$2,704,970 and $1,883,000, 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,  2000,
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)

                                                     December 31
                                            2000                     1999
                                            ----                     ----
                                                  (In thousands)
                     BALANCE SHEETS
ASSETS
  Cash                                    $   1,091                $   497
  Investment in subsidiaries                 46,482                 44,071
  Other assets                                  103                    238
                                          ---------                -------
                                          ---------                -------
TOTAL ASSETS                              $  47,676               $ 44,806
                                          =========               ========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
  Note payable of ESOP                    $    808                $  1,117
  Accrued expenses
                                               (21)                      9
                                          ---------               --------

TOTAL LIABILITIES                              787                   1,126
                                          ---------               --------


STOCKHOLDERS' EQUITY                        46,889                  43,680
                                          --------                --------

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                   $ 47,676               $  44,806
                                          ========               =========











      <PAGE>73
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 13 - Condensed Financial Information (Continued)

                           STATEMENTS OF INCOME
                                                      December 31
                                             2000                      1999
                                             ----                      ----
                                                      (In thousands)
INCOME
       Dividends from bank subsidiary     $    3,828                 $   3,468
       Other income
                                                  63                        34
                                          ----------                 ---------
                                          ----------                 ---------
 TOTAL INCOME
                                               3,891                     3,502
                                          ----------                 ---------


 EXPENSES
       Interest expense                                                     19
       Other expenses                            120                       160
                                          ----------                 ---------

 TOTAL EXPENSES                                  120                       179
                                          ----------                 ---------


Income before income taxes and equity
  in undistributed net income of bank
  subsidiary                                   3,771                     3,323

 Income tax expense (benefit)                    (21)                      (65)
                                          -----------                ----------
                                               3,792                     3,388

 Equity in undistributed net income
  of bank subsidiary                             820                     2,411
                                          ----------                 ----------

       NET INCOME                         $    4,612                 $   5,799
                                          ==========                 ==========


             STATEMENTS OF CASH FLOWS

 Operating Activities
 Net income                               $    4,612                 $   5,799
 Adjustments to reconcile net
  income to net cash provided by
   operating activities:
   Undistributed income of subsidiary           (820)                   (2,411)
   Decrease in other assets                      135                       102
   Increase in other liabilities                 (30)                      (72)
                                          -----------               -----------


NET CASH PROVIDED BY OPERATING ACTIVITIES      3,897                     3,418
                                          -----------               -----------

 Financing Activities
 Payment of principal on note                                             (907)
 Payment of dividends and payments
  in lieu of fractional shares                (3,741)                   (3,384)
 Sale of common stock                            300                       450
 Treasury Stock transactions - net               138                      (67)
                                          -----------               -----------

NET CASH USED BY FINANCING ACTIVITIES         (3,303)                   (3,908)
                                          -----------               -----------

 INCREASE (DECREASE) IN CASH                     594                      (490)

 Cash at beginning of year                       497                       987
                                          -----------               -----------

CASH AT END OF YEAR                       $    1,091                $      497
                                          ===========               ===========









         <PAGE>74
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


Note 14 - Long Term Debt

First  Citizens  National  Bank has secured  advances from the Federal Home Loan
Bank in the amounts of  $55,429,000  at December 31, 2000,  and  $33,963,571  at
December 31, 1999. At December 31, 2000,  $42,429,000 is considered long-term in
nature. These advances bear interest at rates which vary from 4.52% to 6.40% 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 six and
one-half percent (6.5%) per annum and matures February 18, 2001. The Company has
the intent and ability to renew the loan for another five years.

The First Citizens  National Bank Employee Stock  Ownership Plan is obligated to
another  financial  institution  on a note which matures on January 2, 2008, and
which bears interest at one and one-fifth of one percent (1.2%) above the London
Interbank  Offered Rate for one month  periods which is published  monthly.  The
note  requires  quarterly  payments of $52,632 plus  interest.  The  outstanding
principal  balance was $807,631 at December 31, 2000, and $1,117,265 at December
31, 1999.  Collateral for the loan was capital stock of First Citizens  National
Bank  totaling  34,369  shares and 47,544  shares at December 31, 2000 and 1999,
respectively.

Averages for the years 2000 and 1999 are as follows:

                                  Average          Average           Average
                                  Volume         Interest Rate      Maturity
                                                (In thousands)

2000
First Citizens Bancshares, Inc.  $    920            7.25%           5 years
First Citizens National Bank       56,929            5.90%           3 years
Delta Finance Company               1,000            6.00%           5 years

1999
First Citizens Bancshares, Inc.     2,175            6.89%           6 years
First Citizens National Bank       12,528            5.36%           5 years
Delta 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:


          Year Ending December 31,

                    2001                  $   0
                    2002                      0
                    2003                      0
                    2004                      0
                    2005                      0
                 Thereafter              43,429
                                         ------
                                        $43,429




      <PAGE>75

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


Note 15 - Short-term Borrowings

At December 31, 2000 and 1999,  First  Citizens  National  Bank had  outstanding
balances in short-term borrowings as follows:

                                                   2000               1999
                                                   ----               ----
                                                        (In thousands)
Outstanding balance, end of period                $34,174           $46,090
Weighted average interest rate                      5.55%             4.56%
Maximum amount of borrowings at month end          54,600            47,470
Average balances outstanding during the period     49,436            32,759
Average weighted average interest rate              5.97%             4.46%


Note 16 - Non-Cash Investing and Financing Activities

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

                                      2000         1999              1998
                                      ----         ----              ----
Investing                                      (In thousands)
Other real estate acquired in
 Satisfaction of loans                $ 804       $  824            $  249
Investment in White & Associates?
 First Citizens Insurance, L.L.C.                                    1,362
Investment 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, 2000 and 1999,  First  Citizens  National
Bank  had  outstanding   loan   commitments  of  $56,860,000  and   $55,042,000,
respectively.  Of these commitments,  none had an original maturity in excess of
one year.



      <PAGE>76

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 17 - Financial Instruments with Off-Balance Sheet Risk (Continued)

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, 2000 and 1999,
outstanding  standby  letters  of  credit  totaled  $1,761,000  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, 2000 and 1999, 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.


      <PAGE>77
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999


Note 19 - Disclosure of Fair Value of Financial Instruments (Continued)

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, 2000 and
1999.

                                 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:


      <PAGE>78
<TABLE>
<CAPTION>

                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 19 - Disclosure of Fair Value of Financial Instruments (Continued)

                                                         2000                                   1999
                                           ---------------------------------      ----------------------------------
                                              Carrying            Fair               Carrying            Fair
       Financial Assets                        Amount            Value                Amount             Value
                                           ---------------   ---------------      ---------------   ----------------
<S>                                        <C>               <C>                  <C>               <C>
                                                                        (In thousands)
Cash and cash equivalents                  $     23,927      $    23,927          $    17,410       $    17,410

Investment securities                           103,094          103,015               99,137            98,560

Loans                                           340,959                               325,377

Less:  Allowance for loan losses                 (3,763)                               (3,718)
                                           -------------     -----------          ------------       ------------
Loans, net of allowance                         337,196         329,573               321,659           317,218
                                           -------------     -----------          ------------       ------------

Accrued interest receivable                       5,596           5,596                 5,353             5,353

     Financial Liabilities

Deposits                                        371,854         373,051               366,819           365,458

Short-term borrowings                            34,174          34,174                46,090            46,090

Long-term debt                                   43,429          41,474                11,264            11,010

Other liabilities                                 3,800           3,800                 3,700             3,700

    Unrecognized Financial Instruments

Commitments to extend credit                     56,860          56,860                55,042            55,042

Standby letters of credit                         1,761           1,761                 1,761             1,761
</TABLE>
                    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.



      <PAGE>79
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999



Note 21 - Mergers and Acquisitions

During the year ended December 31, 1997, First Citizens Bancshares, Inc. entered
into a stock purchase  agreement to buy all of the outstanding  capital stock of
Bank of Troy,  Troy,  Tennessee,  at a price of two (2) times  book value of the
capital stock  acquired.  The acquisition was consummated on March 5, 1998, at a
price of $9,692,835 in a transaction  accounted for as a purchase.  Accordingly,
the  financial  records  of  Bank of  Troy  were  closed,  and  the  assets  and
liabilities  were adjusted to fair market value as of the date that the purchase
took place.  The operations of the Bank of Troy are included in the consolidated
financial  statements  from  March  5,  1998  through  December  31,  1998.  The
transactions  resulted in goodwill in the amount of  $3,290,977,  which is being
amortized over a period of fifteen (15) years.

During the year ended  December 31, 1999, the Bank of Troy was merged with First
Citizens National Bank and is operated as a branch bank.

Pro forma results of operations of First Citizens  Bancshares,  Inc. computed as
though  Bank of Troy had  been  acquired  at the  beginning  of the  year  ended
December 31, 1997, are as follows:

                                          (In thousands)

                                             1998
Interest income                        $     31,625
Interest expense                             15,493
                                             ------
Net interest income                          16,132
Provision for loan losses                     1,028
                                             ------
Net interest income after
    Provision for loan losses                15,104
Other income                                  4,326
Other expenses                               13,103
                                             ------
Net income before income taxes
                                              6,327
Provision for income taxes                    2,090
                                              -----
Net income                                    4,237
                                              =====
Earnings per share                             1.35
                                               ====
Weighted average shares
    Outstanding                               3,145
                                              =====

Also,  on  February  11,  1998,  First  Citizens  Bancshares,  Inc.  executed  a
transaction  whereby the Corporation  acquired a fifty percent (50%) interest in
White  &  Associates/First  Citizens  Insurance,  L.L.C.,  an  insurance  agency
operating in  Dyersburg,  Tennessee.  The  Corporation  issued  13,779 shares of
common stock and paid  $216,000 in cash for a total value of $1,469,905 in cash.
The asset was then  transferred to First Citizens  National Bank in exchange for
$1,469,905 in cash. The investment is recorded using the equity method and has a
book value of $1,127,696 at December 31, 2000 and $781,542 at December 31, 1999.
The  transaction  created  $1,361,905 of goodwill on the books of First Citizens
National Bank associated with the investment in this Company.

First Citizens National Bank and White & Associates began the process of forming
a credit insurance company during 1998. During the year ended December 31, 1999,
the credit insurance  company was chartered and operated at a profit of $39,878.
Operating  results  for the year  ended  December  31,  2000  showed a profit of
$102,248 of which 50% was accrued to First Citizens National Bank.

      <PAGE>80
                        FIRST CITIZENS BANCSHARES, INC.,
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Note 21 - Mergers and Acquisitions

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 - Common Capital Stock

On April 16, 1998, First Citizens  Bancshares,  Inc. filed Articles of Amendment
to its Charter  increasing the total authorized number of common shares of stock
from 2,000,000 to 10,000,000 and changing the par value from $1 to no par value.
The Corporation then declared a four for one stock split, according to which all
shareholders received three (3) additional shares of common stock for each share
owned.  The split  resulted in the issuance of 2,145,678 new shares.  The shares
are  recorded at one dollar ($1) per share  requiring  the  transfer of an equal
amount from paid-in capital to capital stock.

Note 23 - Amounts Receivable from Related Parties
<TABLE>
<CAPTION>
                                                          Year Ended December 31, 2000
                                   -----------------------------------------------------------------------------
                                   -----------------------------------------------------------------------------
                                                                            (In thousands)
            Column A               Column B       Column C        Column D                        Column E
            --------               --------       --------        --------                        --------
                                   Balance at                                                    Balance at
                                    Beginning                                                      End of
                                    of Period      Additions     Deductions                       Period
                                   ----------    -----------    -----------             -------------------------
                                   ----------    -----------    -----------             -------------------------
                                                                               Amounts
                                                                   Amounts     Written                   Not
                                                                  Collected     Off       Current      Current
<S>                                <C>               <C>           <C>         <C>      <C>            <C>
Aggregate indebtedness
  to First Citizens
  National Bank of
  Directors and Executive
Officers
Of First Citizens
Bancshares, Inc. (26)              $    8,627        $ 6,614       $ 6,383     $   -0-  $    8,858     $   -0-
                                   ===========       =======       =======     =======  ==========    =========
                                   ===========       =======       =======     =======  ==========    =========

Aggregate indebtedness
  to First Citizens
  National Bank of
  Directors and Executive
Officers
 Of First Citizens
  National Bank (26)               $    8,627        $ 6,614       $ 6,383     $   -0-  $    8,858    $   -0-
                                   ==========        =======       =======     =======  ==========    ========




                         <PAGE>81

                                                         Year Ended December 31, 1999
                                    -------------------------------------------------------------------------
                                    -------------------------------------------------------------------------
                                                               (In thousands)
    Aggregate indebtedness
      to First Citizens
      National Bank of
      Directors and Executive
    Officers
     of First Citizens
    Bancshares, Inc. (27)
                                    $    8,234      $  6,984      $ 6,591      $     -0-   $  8,627  $    -0-

                                    ==========      ========     ========      ==========  ========  ========
                                    ==========      ========     ========      ==========  ========  ========

    Aggregate indebtedness
      to First Citizens
      National Bank of
      Directors and Executive
    Officers
     of First Citizens
      National Bank (27)
                                    $    8,234      $  6,984   $   6,591       $     -0-    $  8,627  $   -0-

                                    ==========      =========  =========       ==========   ========  =======
                                    ==========      =========  =========       ==========   ========  =======
</TABLE>

    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.

    Note 24- 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 25 - 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.







          <PAGE>82

    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'  1999  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 1999  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'  1999 Proxy  Statement for the Annual
    Meeting of Shareholders to be held April 19, 2000, 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,  Page 73  "Amounts
    Receivable from Certain Persons".




          <PAGE>83

                                    SIGNATURES

         Pursuant to the  requirements  of Section 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, hereunto duly authorized.

                                                FIRST CITIZENS BANCSHARES, INC.


                                                By
    -----------------------------
                                                   Stallings Lipford
                                                   Chairman


                                                By ___________________________
                                                   Jeff Agee
                                                   Vice President & Principal
                                                   Financial Officer

         Dated:   03/14/01

    Pursuant to the requirements of the Securities Exchange Act of 1934,
    this report has been signed below by the following  persons on behalf of the
    Registrant and in the capacities indicated on March 14, 2000.

   -------------------           ------------------    --------------------
   /s/Eddie Anderson             /s/John M. Lannom     /s/P.H. White, Jr.
   Eddie Anderson                John M. Lannom        P. H. White, Jr.
    Director                     Director              Director

                                 --------------------  --------------------
    ___________________          /s/Stallings Lipford  /s/Dwight Steven Williams
   /s/J. Walter Bradshaw         Stallings Lipford     Dwight Steven Williams
    J. Walter Bradshaw           Director              Director
    Director

    -----------------------      --------------------  --------------------
    /s/James Daniel Carpenter    /s/Milton Magee       /s/Katie Winchester
    James Daniel Carpenter       Milton Magee          Katie Winchester
    Director                     Director              Director


    -----------------------      ----------------------    ------------------
    /s/William C. Cloar          /s/Mary Frances McCauley  /s/Billy S. Yates
    William C. Cloar             Mary Frances McCauley     Billy S. Yates
    Director                     Director                  Director

   ------------------------      -----------------------
    /s/Richard W. Donner         /s/L.D. Pennington
    Richard W. Donner            L. D. Pennington
    Director                     Director

    ------------------------     ------------------------
    /s/Bentley F. Edwards        /s/Allen Searcy
    Bentley F. Edwards           Allen Searcy
    Director                     Director

    ------------------------     ------------------------
    /s/Julius M. Falkoff         /s/Green Smitheal
    Julius M. Falkoff            Green Smitheal
    Director                     Director

    -------------------------    -------------------------
    /s/Larry W. Gibson           /s/William F. Sweat
    Larry W. Gibson              William F. Sweat
    Director                     Director

    --------------------------   -------------------------
    /s/Ralph E. Henson           /s/David R. Taylor
    Ralph E. Henson              David R. Taylor
    Director                     Director

    --------------------------   -------------------------
    /s/Barry T. Ladd             /s/Larry S. White
    Barry T. Ladd                Larry S. White
    Director                     Director