A N N U A L R E P O R T

Transcription

1 2001 ANNUAL REPORT

2 Medical practices have special financial needs. First Citizens takes the time to understand our needs and provides the products, services and expertise so we can achieve our financial goals that s what sets them apart from other banks. And that s why my business is with First Citizens. Dr. Drew Grice, New Bern Surgical Associates, P.A., New Bern, N.C. Grice (center) meets with his bankers, Alex Badger, First Citizens Craven Area executive, and Mary Ann Dunn, financial services manager.

3 FROM THE CHAIRMAN MARCH 18, 2002 Dear Shareholder: The year 2001 was unforgettable. Major mergers and acquisitions created turmoil in the banking industry. Unprecedented economic expansion came to an end. And tragic events in the fall punctuated an already challenging year. We take pride in how our company responded to both adversity and opportunity in 2001 and how we re making great strides toward a brighter future. Our financial condition remains strong. We expanded our reach with enhanced delivery channels and new offices in fast-growing regions of the Southeast. We introduced new products and services that our customers need and demand. We kicked off an internal drive focusing on customer service to boost associate performance. And we laid the groundwork for an external branding campaign that reinforces our values to the people in the many markets we serve. Van Denberg (left) and Debra Callison, First Citizens manager of relationship banking for the Shenandoah Valley, review blueprints at the site of the Salvation Army s new shelter in Harrisonburg, Va. FINANCIAL HIGHLIGHTS The sound business practices we subscribe to prepare us to face difficult financial times. We make prudent credit decisions and maintain a highly liquid balance sheet. And we re working hard to control costs, boost revenues, improve margins and increase earnings. First Citizens net income in 2001 was $86.9 million compared to $98.3 million earned in Excluding nonrecurring items from both years, core net income rose 0.6 percent in Among nonrecurring items for the year were securities gains, non-credit chargeoffs and expenses related to branch closings. Net income per share, excluding nonrecurring items, was $8.01 during 2001 compared to $7.92 in 2000, an improvement of 1.1 percent. First Citizens stepped in when we needed help the most. They provided us guidance and financing to complete a new shelter for emergency housing in our community. Maj. Samuel Van Denberg, Salvation Army of Harrisonburg and Rockingham County, Va. Excluding nonrecurring items, net income for 2001 represented 0.75 percent of average assets and 9.93 percent of average equity, while the return on average assets was 0.84 percent in 2000, and the return on average equity was percent. For 2001, noninterest expense increased 7.0 percent to $422.6 million, the result of higher personnel expenses, non-credit charge-offs and credit card processing fees. Provision for loan losses during 2001 was $24.1 million, a 55.8 percent increase over The increase reflects the growth in nonperforming assets and net charge-offs as well as higher loan loss estimates resulting from the weakening economy in our market areas. Noninterest income grew 6.6 percent to $215.6 million for Despite unprecedented pressure from interest rate cuts and higher charge-offs, core earnings remained stable in 2001 compared with the previous year ANNUAL REPORT 3

4 In addition, First Citizens experienced major revenue successes driven by superior growth in other areas. Credit card income increased 16.1 percent in 2001 compared to the previous year. And our mortgage division experienced a tremendous year prompted by low interest rates. Mortgage revenues increased $7.4 million. We continue to expand our offerings as a comprehensive financial service provider, and nonbank acquisitions broadened our capabilities. We ve acquired several insurance agencies in recent years that support our cross-selling efforts and generate additional fee income. As a result, First Citizens Insurance Services had a banner year with a 40.4 percent increase in commission income. Atlantic States Reid Sides (left), North Florida Region president, and Scott Taccati (right), commercial real estate manager, discuss a residential development project with Paul Fletcher at a resort built by his company in South Ponte Vedra Beach, Fla. Atlantic States Bank promises a customer-driven approach to business, and that s exactly what they deliver. They give me exceptional customer service, responding quickly and efficiently. In my business, that s important. Paul Fletcher, president, Fletcher Land Corporation, Jacksonville, Fla. Another financial highlight of the year was the successful sale of four million trust-preferred securities that raised $100 million. This sale strengthens our well-capitalized position and supports our future growth. MEETING CUSTOMERS NEEDS Our branch network serves as a cornerstone of our company. Our strategically located offices are designed to be inviting and add architectural impact to our markets. We opened a landmark structure in October that symbolizes our long-term commitment to our headquarters market in Raleigh. The 24,000-square-foot building houses a full-service branch and offices for Wake area executive management. Ptolemy Dean, a London artist and architect whose work is known throughout the world, designed the distinctive round structure featured on the cover of this year s annual report. First Citizens Bank also expanded in North Carolina with new offices in Apex, Burnsville, Greensboro, Jacksonville, Mooresville, Newport, Smithfield and at one of the largest shopping complexes in the country, Concord Mills. In Virginia, we moved into Richmond, an exciting new market in a vibrant and fast-growing region of the Southeast. We opened a commercial loan production office in early 2001, and by the end of the year, we finalized plans for our first full-service branch to open in In West Virginia, we opened an office in Fairlea, our third office in Greenbrier County. Atlantic States Bank continued its expansion into vital markets in Georgia and Florida, focusing on providing financial services to the medical community and real estate lending for residential construction programs. Atlantic States opened new offices in Sandy Springs and Towne Lake, Ga. In Florida, new offices were established in Naples and in Ponte Vedra Beach and San Pablo near Jacksonville. We also created a new Southeast Florida Region with our first office in Fort Lauderdale. In Orlando, we opened an item processing center outfitted with the latest technology to capture check information for our offices in Georgia and Florida. We have invested heavily in providing our customers with convenient choices through an efficient multi-channel delivery system. Our goal is a seamless integration of all channels. No matter how people come in contact with us 4 FIRST CITIZENS BANCSHARES

5 Building a golf course is a major business venture. We wanted to work with the people at First Citizens because we know them and we trust them. Sam Solomon, president, Bull Creek Golf Course, Louisburg, N.C. Solomon (right) and Bill Galloway, First Citizens Franklin Area executive study plans at Bull Creek Golf Course, one of only a few minority-owned courses in the country. in a branch, on the Internet, over the phone or at an ATM we want them to experience the same look, feel and superior service. Customers are embracing this anytime, anywhere philosophy of banking with impressive usage rates in all channels. In 2001, we introduced new services to give customers even more options. We expanded our online banking services to include Business Online Banking, known as BOB. The service provides a full range of account management features allowing business owners more time to run their companies. We also improved our Internet capabilities by providing our retail customers the ability to view check images online and to bank through their personal financial software. We added to our telephone banking operations with the opening in June of our second Customer Contact Center, this one in Roanoke. More than six million customer inquiries a year come into our Raleigh center, making a second center necessary to meet growing customer demand. First Citizens commitment to our business customers is evidenced by our development of a powerful new model for building lasting relationships. This model strengthens our connection with customers as their businesses grow and their financial needs evolve. We are already seeing impressive results from this integrated approach and expect to see many more. This relationship-based approach to banking is being integrated successfully in other areas of our business. One good example is the Private Client Group that we launched in key markets in The increasingly complex financial needs of high-net-worth customers demand a partnership between banker and customer. The Private Client Group delivers that connection through the highest levels of professional advice, personal attention and quality products and services. This important business niche has great potential for our company s profitability. OUR CUSTOMER FOCUS In 2001, we reinvigorated our efforts to provide superior customer service ensuring that we are not just meeting, but exceeding expectations at every point of contact. We believe that service excellence is the key to retaining and expanding customer relationships, increasing market share and improving our profitability. To set the standard for exemplary customer service in the banking industry, we felt strongly that we needed a high-level objective look at what our customers and non-customers think about us. We commissioned a world-renowned research organization and an acclaimed national advertising agency to conduct separate research efforts involving interviews with thousands of people in the markets we serve. The results from both companies show that our customers are amazed with First Citizens service levels. In fact, a representative of the international research firm noted that First Citizens scores for customer engagement, defined as loyalty and emotional bond, surpassed those of all of his other banking clients in the world. Although we were extremely gratified that research validated our outstanding reputation for service, we know we can do even better ANNUAL REPORT 5

6 In the retail industry, we understand the value of convenience and great service. So does First Citizens Bank. We never knew how easy banking could be until we started working with First Citizens. Juan Garcia, manager, Burlington Coat Factory, Concord, N.C. Garcia (right) speaks with Ken Yelton, First Citizens Concord market executive, at the bank s new office at Concord Mills. First Citizens is the official banking partner of the shopping complex. We initiated an internal strategy called Customers First, which establishes a clear vision for customer service excellence. To assist us with this important effort, we engaged consultants who helped shape the famous customer service model at Disney, one of the world s best service providers. Customers First is a long-term initiative that will continue to incorporate service excellence standards into our everyday processes and behaviors. First Citizens has a great story to tell. It s a story of longevity, stability and superior service. We know customers will go out of their way to do business with a company that cares about them and understands their needs. With all of the merger-related opportunities in the banking industry, it s now more important than ever to tell our story especially to people who don t know us. In 2001, we laid the groundwork for an external branding campaign that debuted this year. Do Something Amazing articulates the powerful brand message that First Citizens will send throughout its markets with compelling ads and other communications. We want people to know that a relationship with First Citizens can help transform their goals into amazing achievements. A STRONG FUTURE Over the past 104 years we have built a strong and flexible company. We ve never wavered in our belief in the people and businesses we serve, and we are committed to helping our customers through these uncertain economic times. The weak economy of 2001 will continue to affect our 2002 earnings. But these challenges are nothing new to us. We have successfully weathered the country s economic ups and downs over our long history in business. We have excellent people, a solid infrastructure and dynamic strategic plans in place to overcome these challenges and to prosper. We look forward to this year with confidence and determination to build value, attract new customers and remain the best bank for you and for all of the people in our markets. Sincerely, Lewis R. Holding Chairman of the Board 6 FIRST CITIZENS BANCSHARES

7 INDEPENDENT AUDITORS REPORT First Citizens customer service is the best. Whether it s in a branch or THE BOARD OF DIRECTORS AND SHAREHOLDERS FIRST CITIZENS BANCSHARES, INC. We have audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheets of First Citizens BancShares, Inc. and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in shareholders equity, and cash flows for each of the years in the three-year period ended December 31, 2001 (not presented herein); and in our report dated January 28, 2002, we expressed an unqualified opinion on those consolidated financial statements. online, they always meet my needs. That s why I ve developed a complete financial relationship with them. Steve McGlothlin, regional president, True2Form collision repair centers, Mooresville, N.C. In our opinion, the information set forth in the accompanying consolidated condensed balance sheets and statements of income (included on pages 8 and 9 herein) is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Sherry Knotts (left), First Citizens teller Raleigh, North Carolina March 18, 2002 supervisor, greets McGlothlin at the new Mooresville branch.

8 CONSOLIDATED CONDENSED BALANCE SHEETS FIRST CITIZENS BANCSHARES, INC. AND SUBSIDIARIES DECEMBER 31 (thousands, except share data) ASSETS Cash and due from banks $ 758,987 $ 755,930 Overnight investments 501, ,382 Investment securities held to maturity (fair value of $2,680,700 in 2001 and $1,783,888 in 2000) 2,658,851 1,778,166 Investment securities available for sale (cost of $119,797 in 2001 and $28,875 in 2000) 132,445 38,554 Loans 7,196,177 7,109,692 Less reserve for loan losses 107, ,655 Net loans 7,089,090 7,007,037 Premises and equipment 483, ,731 Income earned not collected 63,604 62,580 Other assets 177, ,237 Total assets $ 11,864,991 $ 10,691,617 LIABILITIES Deposits: Noninterest-bearing $ 1,650,101 $ 1,373,880 Interest-bearing 8,311,504 7,597,988 Total deposits 9,961,605 8,971,868 Short-term borrowings 611, ,372 Long-term obligations 284, ,332 Other liabilities 122, ,317 Total liabilities 10,979,948 9,880,889 SHAREHOLDERS EQUITY Common stock: Class A $1 par value (11,000,000 shares authorized; 8,797,154 shares issued for 2001; 8,813,454 shares issued for 2000) 8,797 8,813 Class B $1 par value (2,000,000 shares authorized; 1,686,302 shares issued for 2001; 1,709,382 shares issued for 2000) 1,686 1,709 Surplus 143, ,766 Retained earnings 723, ,148 Accumulated other comprehensive income 7,672 6,292 Total shareholders equity 885, ,728 Total liabilities and shareholders equity $ 11,864,991 $ 10,691,617 8 FIRST CITIZENS BANCSHARES

9 CONSOLIDATED CONDENSED STATEMENTS OF INCOME FIRST CITIZENS BANCSHARES, INC. AND SUBSIDIARIES YEAR ENDED DECEMBER 31 (thousands, except share and per share data) INTEREST INCOME Loans $ 566,592 $ 584,475 $ 510,272 Investment securities: U. S. Government 117,608 96, ,435 State, county and municipal Dividends 2, Total investment securities interest income 120,159 97, ,130 Overnight investments 28,676 26,129 16,489 Total interest income 715, , ,891 INTEREST EXPENSE Deposits 310, , ,921 Short-term borrowings 20,643 31,219 23,921 Long-term obligations 15,115 12,653 12,700 Total interest expense 346, , ,542 Net interest income 368, , ,349 Provision for loan losses 24,134 15,488 11,672 Net interest income after provision for loan losses 344, , ,677 NONINTEREST INCOME Service charges on deposit accounts 70,066 59,384 55,169 Credit card income 42,759 36,837 30,820 Commission-based income 19,774 17,295 13,772 Fees from processing services 17,452 14,556 12,987 Trust income 15,114 14,814 13,848 Mortgage income 12,557 5,172 6,440 ATM income 11,192 10,844 10,655 Other service charges and fees 13,896 12,077 9,935 Gain on sale of mortgage servicing rights , Gain on sale of branches -- 4,085 5,063 Securities gains 7,189 1,810 1,706 Other 5,256 5,129 4,944 Total noninterest income 215, , ,339 NONINTEREST EXPENSE Salaries and wages 181, , ,440 Employee benefits 35,897 32,136 30,455 Occupancy expense 35,584 33,835 30,041 Equipment expense 40,861 38,153 37,745 Other 129, , ,939 Total noninterest expense 422, , ,620 Income before income taxes 137, , ,396 Income taxes 50,805 58,949 48,596 Net income $ 86,936 $ 98,311 $ 81,800 PER SHARE INFORMATION Net income $ 8.27 $ 9.32 $ 7.70 Cash dividends Weighted average shares outstanding 10,507,289 10,551,607 10,625, ANNUAL REPORT 9

10 2001 FINANCIAL REPORT INCOME SUMMARY PROFITABILITY RATIOS AND PER SHARE DATA (thousands, except ratio and per share data) SUMMARY OF OPERATIONS Interest income $ 715,427 $ 708,170 $ 633,891 $ 619,487 $ 572,276 Interest expense 346, , , , ,013 Net interest income 368, , , , ,263 Provision for loan losses 24,134 15,488 11,672 19,879 8,726 Net interest income after provision for loan losses 344, , , , ,537 Noninterest income 215, , , , ,914 Noninterest expense 422, , , , ,401 Income before income taxes 137, , , , ,050 Income taxes 50,805 58,949 48,596 39,732 39,492 Net income $ 86,936 $ 98,311 $ 81,800 $ 71,009 $ 70,558 Net interest income, taxable equivalent $ 370,857 $ 368,190 $ 354,566 $ 329,764 $ 306,726 PROFITABILITY RATIOS Rate of return on: Total assets 0.77% 0.98% 0.85% 0.77% 0.85% Shareholders equity Dividend payout ratio PER SHARE OF STOCK Net income $ 8.27 $ 9.32 $ 7.70 $ 6.62 $ 6.22 Cash dividends Market price at December 31 (Class A) Book value at December Tangible book value at December NET INCOME Dollars in millions $98.3 NET INCOME PER SHARE $9.32 RETURN ON AVERAGE ASSETS 0.98% $81.8 $86.9 $7.70 $ % 0.77% 0.85% 0.77% $70.6 $71.0 $6.22 $ FIRST CITIZENS BANCSHARES

11 2001 FINANCIAL SUMMARY AVERAGE BALANCE SHEETS (thousands, except share data) ASSETS Cash and due from banks $ 592,270 $ 476,929 $ 459,202 $ 400,896 $ 345,578 Overnight investments 735, , , , ,646 Investment securities 2,196,473 1,618,584 1,908,300 2,305,395 2,300,706 Loans 7,105,915 6,955,772 6,399,114 5,847,531 5,086,723 Interest earning assets 10,038,074 8,984,878 8,638,698 8,281,072 7,569,075 Reserve for loan losses (104,875) (100,459) (97,051) (89,819) (82,232) Premises and equipment 466, , , , ,163 Other assets 243, , , , ,828 Total assets $11,235,859 $10,005,597 $9,622,774 $9,173,020 $8,304,412 LIABILITIES AND SHAREHOLDERS EQUITY Demand deposits $ 1,453,833 $ 1,351,515 $1,303,067 $1,183,223 $1,046,703 Interest-bearing deposits 7,951,495 7,039,405 6,802,376 6,576,092 6,041,316 Total deposits 9,405,328 8,390,920 8,105,443 7,759,315 7,088,019 Short-term borrowings 660, , , , ,030 Long-term obligations 186, , , ,935 10,472 Interest-bearing liabilities 8,798,893 7,772,889 7,517,483 7,249,290 6,521,818 Other liabilities 135, , , ,418 97,066 Total liabilities 10,388,485 9,242,211 8,929,215 8,543,931 7,665,587 Shareholders equity 847, , , , ,825 Total liabilities and shareholders equity $11,235,859 $10,005,597 $9,622,774 $9,173,020 $8,304,412 Shares outstanding 10,507,289 10,551,607 10,625,457 10,626,311 11,341,153 AVERAGE LOANS Dollars in billions $7.0 $7.1 AVERAGE ASSETS Dollars in billions AVERAGE DEPOSITS Dollars in billions $11.2 $9.4 $5.8 $6.4 $9.6 $10.0 $7.8 $8.1 $8.4 $5.1 $9.2 $7.1 $ ANNUAL REPORT 11

12 FIRST CITIZENS BANCSHARES, INC. PRINCIPAL SUBSIDIARIES FIRST CITIZENS BANCSHARES, INC. FINANCIAL HOLDING COMPANY Raleigh, N.C. ATLANTIC STATES BANK Alpharetta, Ga. Fort Myers, Fla. FIRST- CITIZENS BANK & TRUST COMPANY Raleigh, N.C. AMERICAN GUARANTY INSURANCE COMPANY Raleigh, N.C. TRIANGLE LIFE INSURANCE COMPANY Raleigh, N.C. FIRST CITIZENS INVESTOR SERVICES, INC. (BROKER-DEALER IN SECURITIES) Raleigh, N.C. FIRST CITIZENS BANK, A VIRGINIA CORPORATION (CREDIT CARDS) Roanoke, Va. OFFICERS AND DIRECTORS GENERAL OFFICERS First Citizens BancShares, Inc. Lewis R. Holding Chairman of the Board Frank B. Holding Executive Vice Chairman of the Board James B. Hyler, Jr. Vice Chairman of the Board Frank B. Holding, Jr. President Kenneth A. Black Vice President and Treasurer Alex G. MacFadyen, Jr. Secretary BOARD OF DIRECTORS First Citizens BancShares, Inc. First-Citizens Bank & Trust Company John M. Alexander, Jr., Raleigh President, General Manager and Chief Operating Officer Cardinal International Trucks, Inc. (Truck Dealer) Carmen Holding Ames, San Francisco Former Assistant Susan B. Bozeman Designs, Inc. (Residential Interior Design) B. Irvin Boyle, Charlotte Attorney Johnston, Allison & Hord George H. Broadrick, Charlotte Chairman of the Executive Committee and Consultant First Citizens Bank H. M. Craig, III, Stanley Vice President and Director North American Sales Gaston County Dyeing Machine Company (Textile Machinery Manufacturer) Betty M. Farnsworth, Pilot Mountain Homemaker and Former Director Farmers Bank, Pilot Mountain Lewis M. Fetterman, Clinton Chairman and Chief Executive Officer Super Soil Systems USA, Inc. (Agribusiness) Frank B. Holding, Smithfield Executive Vice Chairman of the Board First Citizens Bank Frank B. Holding, Jr., Raleigh President First Citizens Bank Lewis R. Holding, Lyford Cay, Bahamas Chairman of the Board First Citizens Bank Charles B.C. Holt, Fayetteville Director Holt Oil Company, Inc. James B. Hyler, Jr., Raleigh Vice Chairman of the Board First Citizens Bank Dr. Gale D. Johnson, Dunn Retired Surgeon Director, Health Affairs Campbell University Freeman R. Jones, Midland President EFC Corporation (Real Estate Investment) Lucius S. Jones, Wendell President, Chief Executive Officer and Owner United Realty and Construction Company, Inc. Joseph T. Maloney, Jr., Fayetteville Private Investor J. Claude Mayo, Jr., Rocky Mount Retired Principal Mayo, Simmons & Harris, Inc. (Insurance) Lewis T. Nunnelee, II, Wilmington Chairman of the Board Coastal Beverage Company, Inc. (Wholesale Distributor) Dr. Talbert O. Shaw, Raleigh President Shaw University R.C. Soles, Jr., Tabor City N.C. State Senator, Attorney and Senior Partner Soles, Phipps, Ray & Prince David L. Ward, Jr., New Bern Attorney and Senior Member Ward and Smith, P.A. 12 FIRST CITIZENS BANCSHARES

13 First Citizens Bank is committed to a culture of diversity that reflects the communities in which we live and do business. We foster an environment that enables all members of our workforce to contribute their full potential. In 2001, we established a Corporate Diversity Council, comprised of top bank executives, including council co-chair Lee Hardeman (right), First Citizens manager of human resources compliance and diversity, and council member David Park, manager of business and technology solutions. GENERAL INFORMATION SHAREHOLDERS MEETING The 2002 Annual Meeting of Shareholders will be held at the Raleigh Main Office, Lower Level, 239 Fayetteville Street Mall, Raleigh, at 1 p.m. on April 22, The proxy and proxy statement were mailed with the Annual Report to shareholders on or about March 18, STOCK First Citizens BancShares Class A and Class B common stock are registered with the Securities and Exchange Commission. The Class A common stock is included in the Nasdaq National Market System, listed under the symbol FCNCA. FINANCIAL REPORTS To obtain a copy of First Citizens BancShares Annual Report, call , write First Citizens Bank Corporate Communications, P.O. Box 27131, Raleigh, N.C , or reach us through the Contact section on our Web site, firstcitizens.com. FINANCIAL INFORMATION Analysts, investors and others seeking financial information about First Citizens should contact Chief Financial Officer Kenneth A. Black at NEWS MEDIA INFORMATION News media representatives and others seeking general information should contact Senior Vice President Barbara Thompson, First Citizens Bank Corporate Communications, at EQUAL OPPORTUNITY EMPLOYER The policy of First Citizens is to hire well-qualified people to perform the many tasks necessary in providing high-quality service at reasonable cost. An integral part of this policy is to provide equal employment opportunity for all persons by administering recruitment, hiring, working conditions, benefits, privileges of employment, compensation, training, appointments for advancement including upgrading and promotion, transfers, relocations and terminations of employment including layoffs and recalls for all employees without discrimination because of race, color, creed, religion, national origin, gender, age, veteran status, disability or any other legally protected status. PRIVACY Maintaining the security and privacy of customer information is a top priority. Our customers can rest assured that we do not sell mailing lists or other customer information to outside companies. For our complete privacy notice, call toll free or visit our Web site, firstcitizens.com ANNUAL REPORT 13

14 OUR CUSTOMER FOCUS More than 5,000 associates meet the financial needs of our customers through a variety of convenient delivery channels. We re proud to serve people in the following communities: North Carolina Aberdeen Albemarle Angier Apex Archdale Asheville Atkinson Atlantic Beach Banner Elk Bayboro Beaufort Benson Bethlehem Beulaville Bladenboro Blowing Rock Boone Boonville Brevard Bryson City Buies Creek Bunn Burgaw Burnsville Camp LeJeune Canton Cape Carteret Carolina Beach Cary Chapel Hill Charlotte Cherokee Cherry Point Clayton Clemmons Clinton Coats Columbus Concord Conway Cornelius Denver Dobson Dunn Durham East Flat Rock Eden Elizabeth City Elizabethtown Fairview Fayetteville Fletcher Forest City Fort Bragg Franklin Franklinton Fuquay-Varina Garner Goldsboro Granite Falls Greensboro Greenville Grifton Hampstead Harrells Havelock Hayesville Hazelwood Henderson Hendersonville Henrietta Hickory Highlands High Point Hildebran Hookerton Hope Mills Hudson Huntersville Indian Trail Jacksonville Kernersville King Kinston Knightdale Lansing Lenoir Lewisville Lincolnton Littleton Louisburg Madison Maggie Valley Maiden Mills River Marion Marshall Marshville Matthews Maysville Meadow Mint Hill Monroe Mooresville Morehead City Morgan s Corner Morganton Mount Airy Murphy New Bern Newport Newton Newton Grove North Wilkesboro Oriental Peachtree Pilot Pilot Mountain Pinehurst Pineville Pink Hill Pisgah Forest Pittsboro Princeton Raleigh Ramseur Reidsville Research Triangle Park Richlands Roanoke Rapids Robbinsville Roseboro Rural Hall Rutherford College Saluda Sanford Selma Shallotte Smithfield Sneads Ferry Snow Hill Southern Pines Southport Sparta Spring Hope Stanleyville Statesville Stedman Sunbury Swansboro Sylva Taylorsville Thomasville Tryon Valdese Walnut Cove Warrenton Washington Waynesville Weldon Wendell West Jefferson Whiteville Wilkesboro Williamston Wilmington Wilson Winston-Salem Winterville Yaupon Beach Zebulon Virginia Alberta Bedford Big Island Blacksburg Boydton Charlottesville Chase City Chatham Christiansburg Clifton Forge Collinsville Crewe Danville Drakes Branch Dublin Emporia Front Royal Galax Harrisonburg Lawrenceville Lynchburg Martinsville Richmond Roanoke Salem South Hill Staunton Verona Victoria Vinton West Virigina Arbovale Fairlea Lewisburg Marlinton White Sulphur Springs Georgia Alpharetta Atlanta Decatur Duluth Dunwoody Kennesaw Lawrenceville Marietta Norcross Roswell Snellville Suwanee Woodstock Florida Bonita Springs Cape Coral Fort Lauderdale Fort Myers Jacksonville LaBelle Marco Island Naples Ponte Vedra Beach DELIVERY CHANNELS Online Banking firstcitizens.com atlanticstatesbank.com Atlanta Customer Contact Center FC DIRECT (First Citizens Bank) AS DIRECT (Atlantic States Bank) Automated Teller Machines* 451 ATMs Branch Network* First Citizens Bank 348 branches in North Carolina, Virginia and West Virginia Atlantic States Bank 44 branches in Georgia and Florida Regional headquarters noted on map * As of December 31, 2001 Charlotte Jacksonville Roanoke Fort Myers Raleigh Fort Lauderdale 14 FIRST CITIZENS BANCSHARES

15 MAKING A DIFFERENCE First Citizens is committed to the communities we serve and call home. Our associates devote thousands of hours annually to philanthropic endeavors. Those who volunteer contribute an average of nine hours a month, well above the national average. Although the list of non-profit and community initiatives that we support is long, we focus on four key areas: economic and community development; education; human services; and the arts and culture. Our goal is to differentiate our support of education by focusing on financial literacy. To that end, we champion hundreds of financial literacy initiatives throughout our markets. One example in the business community is the bank s partnership with the North Carolina Institute of Minority Economic Development, which has provided 20,000 hours of management and technical assistance to 1,200 companies. For consumers, our associates are engaged in making presentations to community groups on topics including credit, budgeting and home ownership. We know how important education is to our children and to our future. Our associates are involved in adopting schools and serve as tutors, mentors, classroom volunteers and as members of school boards and parent organizations. One notable program that reflects our commitment to education is Advantage Carolina, a public-private effort to further bolster the educational and economic success of the Charlotte region. First Citizens is actively involved in many aspects of the campaign including Charlotte Reads, a program that brings bank associates into schools to read to and tutor at-risk children. First Citizens also places a major emphasis on serving the diverse community needs of our markets. The bank was instrumental in helping the Brick Capital Community Development Corporation secure funding to restore a historic African-American school in Sanford for use as a cultural and educational community center. We are a major supporter of the arts in many of our communities. In our corporate headquarters market, we are proud to be among the largest financial contributors to the United Arts Council of Raleigh and Wake County. The bank s associates answer the call time and again to support our communities and help those in need. Undoubtedly, the defining moment of 2001 was the tragic events of Sept. 11. Our associates rallied to the support of the victims and their families. They participated in numerous blood drives. They also donated to the American Red Cross relief fund. The bank supported associates efforts with a corporate contribution. We re proud of how our company responded to this national tragedy and the challenges that followed. TOP: An exhibit about the history of First Citizens Bank debuted in 2001 at Johnston County s Heritage Center, which can be found in the bank s former home office building in downtown Smithfield, N.C. CENTER: Allen Woodward, First Citizens western regional executive vice president, reads to children at First Ward Community Development Center as part of the Charlotte Reads initiative to help tackle illiteracy in Mecklenburg County. BOTTOM: Atlantic States Bank associates in Jacksonville, Fla., work on a Habitat for Humanity project. Community involvement is a vital part of First Citizens success in all of the markets we serve. We pledge continued resources to uphold our corporate responsibility to help make our communities better places to live.

16 ON THE COVER At First Citizens, we re proud of the many ways we serve the people in our markets. Our bank branches, like the new North Hills office in Raleigh (top), are among the most recognized buildings in the communities we serve. And our associates are committed to building strong relationships with customers. Photos, left to right: Dr. Drew Grice, customer, and Alex Badger, Craven Area executive, New Bern; Sherry Knotts, teller supervisor, Brenda Pehlman, financial services representative, and Steve McGlothlin, customer, Mooresville; Debra Callison, manager of relationship banking, and Maj. Samuel Van Denberg, customer, Harrisonburg; Bill Galloway, Franklin Area executive, and Sam Solomon, customer, Louisburg (3/02)