<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended March 31, 1994 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
Court Street, Dyersburg, Tennessee 38024
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (901) 285-4410
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 3 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Of the registrant's only class of common stock ($10.00 par value) there were
707,124 shares outstanding as of March 31, 1994.
<PAGE>
<PAGE> 2
PART I -FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<PAGE>
<PAGE> 3
FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
March 31, December 31,
1994 1993
(Unaudited) (Note)
ASSETS
Cash and due from banks $10,841,000 $8,408,000
Federal funds sold $4,575,000 $5,200,000
Investment securities (Market value is $61,392,000
at March 31, 1994 and $61,789,000 at December
31, 1993.
Held to maturity-amortized cost $45,248,000 $60,747,000
Available for sale-stated at market $16,289,000 $0
Loans (Excluding unearned income of $1,058,000
at March 31, 1994 and $1,066,000
at December 31, 1993) $152,842,000 $149,322,000
Less: Allowance for loan losses $1,795,000 $1,676,000
Net Loans $151,047,000 $147,646,000
Premises and equipment $8,136,000 $7,778,000
Other assets $3,782,000 $5,113,000
TOTAL ASSETS $239,918,000 $234,892,000
LIABILITIES AND STOCKHOLDERS EQUITY
Deposits $195,214,000 $193,823,000
Securities sold under agreements
to repurchase $17,860,000 $16,914,000
Federal funds purchased and
other short term borrowings $0 $0
Long term debt-note 3 (includes long term FHLB) $2,325,000 $30,000
Notes payable of employee stock ownership plan $0 $0
Other liabilities $2,050,000 $2,424,000
TOTAL LIABILITIES $217,449,000 $213,191,000
Contingent liabilities--See Note 5
Stockholders' equity
Common stock, $10 par value-750,000 authorized;
707,349 issued and outstanding at March
31, 1994; 706,315 issued and outstanding at
Dec 31, 1993 $7,073,000 $7,067,000
Surplus $2,370,000 $2,356,000
Retained earnings $12,977,000 $12,338,000
Obligation of employee stock ownership plan $0 $0
Net unrealized gains (losses) on available for sale $57,000 $0
Total common stock and retained earnings $22,477,000 $21,761,000
Less-treasury 225 shares, at cost at March 31,
1994 and 2024 at December 31, 1993 ($8,000) ($60,000)
TOTAL STOCKHOLDERS' EQUITY $22,469,000 $21,701,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $239,918,000 $234,892,000
NOTE: The balance sheet at December 31, 1993 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 4
FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Month Periods Ended
March 31, March 31,
1994 1993
INTEREST INCOME
Interest and fees on loans $3,449,000 $3,365,000
Interest on investment securities:
Taxable $707,000 $1,013,000
Tax-exempt $146,000 $98,000
Other interest income $55,000 $34,000
lease financing income $1,000 $2,000
TOTAL INTEREST INCOME $4,358,000 $4,512,000
INTEREST EXPENSE
Interest on deposits $1,600,000 $1,652,000
Other interest expense $147,000 $177,000
TOTAL INTEREST EXPENSE $1,747,000 $1,829,000
NET INTEREST INCOME $2,611,000 $2,683,000
Provision for loan losses $99,000 $117,000
Net interest income after provision $2,512,000 $2,566,000
Other Income
Securities gains (losses) $0 $12,000
Other income $774,000 $546,000
Total Other Income $774,000 $558,000
Other expenses $2,116,000 $2,072,000
Net income before income taxes $1,170,000 $1,052,000
Provision for income taxes $343,000 $298,000
Net Income $827,000 $754,000
Earnings Per Share $1.17 $1.08 *
Weighted average number of shares outstanding 706798 698617 *
* Adjusted for comparison purposes to reflect a 2.5 for 1 stock split
effective November 15, 1993.
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<PAGE> 5
FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31
1994 1993 1992
OPERATING ACTIVITIES
Net cash provided by
operating activities $528,000 $1,475,000 $508,000
INVESTING ACTIVITIES
Proceeds of maturities of securities $8,024,000 $6,677,000 $5,101,000
Proceeds from sales of
investment securities $0 $0 $3,100,000
Purchase of investment securities ($7,340,000) ($8,037,000) ($13,522,000)
Increase in loans-net ($3,500,000) ($3,495,000) $54,000
Purchases of premises and equipment ($420,000) ($112,000) ($349,000)
Net Cash provided by
investing activities ($3,236,000) ($4,967,000) ($5,616,000)
FINANCING ACTIVITIES
Net Increase (Decrease) in Demand
and Savings Accounts $625,000 ($2,882,000) ($145,000)
Increase (Decrease) in Time Accounts $766,000 ($917,000) ($3,610,000)
Increase (Decrease) in Long term Debt $2,295,000 ($33,000) ($33,000)
Treasury Stock Transactions $52,000 $0 $0
Proceeds from Sale of Common Stock $20,000 $38,000 $0
Cash Dividends Paid ($188,000) ($169,000) ($147,000)
Cash Paid in lieu of fractional shares $0 $0 $0
Net Increase (Decrease) in
Short Term Borrowings $946,000 $200,000 $3,082,000
Net Cash provided (used) by
Financing Activities $4,516,000 ($3,763,000) ($853,000)
Increase (Decrease) in Cash and
Cash Equivalents $1,808,000 ($7,255,000) ($5,961,000)
Cash and Cash Equivalents at
beginning of year $13,608,000 $17,291,000 $22,400,000
Cash and Cash Equivalents at
end of year $15,416,000 $10,036,000 $16,439,000
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<PAGE 6>
FIRST CITIZENS BANCSHARES, INC.,
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1994
NOTE 1-CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1994, the consolidated
statements of income for the three month period ended March 31, 1994, 1993
and 1992, and the consolidated statements of cash flows for the three month
periods then ended have been prepared by the company without an audit. The
accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments necessary to present fairly the financial position, results
of operations and cash flows at March 31, 1994 and for all periods
presented have been made. Operating results for the reporting periods
presented are not necessarily indicative of the results that may be
expected for the year ended December 31, 1994. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the company's annual report on Form 10-K for the year ended
December 31, 1993.
NOTE 2-ORGANIZATION
First Citizens Bancshares, Inc., is a Bank Holding Company chartered
on December 14,1982, under the laws of the State of Tennessee. On
September 23, 1983 all of the outstanding shares of common stock of First
Citizens National Bank were exchanged for an equal number of shares in
First Citizens Bancshares, Inc.
NOTE 3-LONG TERM DEBT
During the year ended December 31, 1989, First Citizens National Bank
placed in service furniture, fixtures, and equipment with a total cost of
$520,964 which were acquired through capital leases. These leases became
effective at various dates ranging from January, 1989 through October, 1989
and each lease extends for a term of sixty months. The total liability on
these leases as originated was $655,232 with $11,000 remaining to be paid
as of march 31, 1994. Future minimum lease payments according to these
leases are as follows:
Years Ending
December 31, 1994 $11,000
Less amount representing interest $3,000
Present value of net minimum lease payments $8,000
NOTE 4-STATEMENT OF CASH FLOWS
March March March
1994 1993 1992
Actual payments made during the periods:
Income taxes $65,000 $261,000 $244,000
Interest $1,836,000 $1,933,000 $2,595,000
NOTE 5-CONTINGENT LIABILITIES
There are no material pending litigations as of March 31, 1994.
<PAGE>
<PAGE 7>
FIRST CITIZENS BANCSHARES, INC.,
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CON'T)
(UNAUDITED)
MARCH 31, 1994
NOTE 6-INVESTMENT SECURITIES
The differences between book values of investment securities and
market values at March 31, 1994 and March 31, 1993, total ($145,000) and
$1,042,000 respectively. FASB 115 requires a bank to classify securities
held to maturity, available for sale, or trading. First Citizens has $0 in
the trading account. The available for sale securities values are adjusted
to market every quarter and the adjustments flow to the capital section
(net of tax). The held to maturity securities are stated at amortized cost.
The available for sale securities reflect a positive increase of $95,000
the first quarter of 1994 and net of tax effect to the capital account was
$57,000. These movements can fluctuate with the bond market.
NOTE 7-REGULATORY CAPITAL REQUIREMENTS
Regulatory agencies impose certain minimum capital requirements on
both First Citizens Bancshares, Inc., and First Citizens National Bank.
On December 16, 1988, the Federal Reserve Board approved the Risk Based
Capital Guidelines for Bank Holding Companies. Presently, the Holding
Company and First Citizens National Bank exceed the required minimum
standards set by the Regulators.
NOTE 8-DEFERRED INCOME TAXES
First Citizens adopted FASB 109 as of January 1, 1993. The March, 1993
figures reflected a $50,000 credit to income tax expense and the adjustment
for March, 1994 reflected a credit to income tax expense of $14,000. The
timing differences mainly consist of Reserve for Loan
Loss Deductions.
NOTE 9-STOCK SPLIT
A 2.5 for 1 stock split was authorized by the Board for Shareholders
of record as of October 15, 1993. Additional shares accrued were
distributed November 15, 1993. The outstanding shares and earnings per
share for 1993 were adjusted to reflect the 2.5 for 1 stock split.
NOTE 10-OTHER BORROWINGS
The Other Borrowings consists of Federal Home Loan Bank Funds in
the amount of $2,325,000. The average maturity of these borrowings is
10 years.
NOTE 11-OTHER INCOME
The Jackson Tennessee property was sold for a gain of $297,000. The
net of tax effect was $178,000 or $.25 per share.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The purpose of the following discussion is to address significant
changes in income and expense accounts when compared to the quarter ending
March 31, 1993. Reference should be made to the Financial Statements
included as ITEM 1 for a more thorough understanding of the analysis. The
discussion relates mainly to activities of First Citizens National Bank
(First Citizens) in its banking business. However, the consolidated
statements of income reflect activities of both First Citizens and First
Citizens Bancshares, Inc. (Bancshares). Limited activities to date by the
Holding Company do not materially affect the income report.
<PAGE>
<PAGE> 8
Results of operations for First Citizens Bancshares, Inc. and its sub-
sidiaries are impacted by external forces over which management has little
or no control. The impact of changes in the economic environment, laws and
regulations and accounting standards vary with each situation. During the
first quarter of 1994 the low interest rate environment, changes in
consumer confidence, and implementation of Financial Accounting Standard
No. 115 had an impact on the Net Income of Bancshares. The first quarter,
1994 net income was $827,000 compared to $754,000 in the same quarter of
1993 reflecting a 10% increase. However, first quarter net income was
materially affected by a one time after tax credit of $178,000 to the
income account from the the sale of Other Real Estate from the Holding
Company. Without the credit, net income would have been $649,000, or 8.60%
less than the prior year. Net Interest Income after the provision for loan
losses decreased approximately $54,000 (3%) when comparing March 31, 1994
to March 31, 1993. The decrease is primarily attributed to (1) a change in
customer's willingness to pay loan fees when competition had 0 fees (2) a
slow down in refinancing of mortgage loans (3) reduced commissions from the
sale of credit life insurance and annuities, and (4) a decline in service
fees for the accounts receivable factoring product. Income collected from
the Bank's Mortgage Lending Department decreased $76,000 in 1994 when
compared to same time period in 1993, while credit life and annuity
commissions decreased $35,000 and $38,000 respectively. Fees collected
from accounts receivable factoring decreased $21,000. A decrease of
approximately $72,000 in Total Interest Expense and $18,000 in the Reserve
for Loan Losses partially offset the reduced income. Earnings at quarter
end were $1.17 per share, reflecting an increase of nine cents when
comparing to December 31, 1993. Implementation of FASB 115 had a positive
impact (Net of Taxes) of $54,000 to the capital account.
Assets are traditionally lower as of the end of the first quarter when
comparing to the prior year end. This is attributed to the agricultural
segment of the economy, with year end totals inflated to reflect receipt of
harvest income. By March 31 each year, funds have been utilized to pay off
expenses deferred from the prior year or reinvested in expenses of the
current year's operations. However, when comparing March 31, 1994 to
December 31, 1993 assets are up by approximately $5,000,000. Total Loans
increased approximately $3,520,000 or 2.35%. Other factors reflecting in
the increased asset total is Deposit Growth of $1,391,000 and long term
debt including loans guaranteed by the Federal Home Loan Bank totaling
$2,325,000. In 1994, the bank, by means of an agreement with the Federal
Home Loan Bank, offered a new fixed rate mortgage loan product having up to
a 15 year maturity date. These loans are funded through the Federal Home
Loan Bank Line of Credit. The pressure on deposit totals is expected to
ease off if interest rates continue to move upward causing part of the
investment dollars that moved to higher yielding investment during the low
rate environment to transfer back to bank deposits. The Bank's management
has made no attempt to attract funds by paying CD rates in excess of
reasonable limits based on current market conditions. Through
asset/liability management process, earning assets and costing liabilities
are constantly monitored for unfavorable trends. A conscious effort has
been made to control growth in order to remain within desired capital
ratios and to maximize the Bank's return on assets and equity. An improved
capital to asset ratio is evident when comparing these categories for
3/31/94 and 12/31/93. Another major factor contributing to slow asset
growth is the Bank's location in a highly competitive market place shared
with five other banking institutions. Management believes the bank is well
positioned to be competitive with even the largest institution in the
Bank's servicing area. Products and services are offered that meet the
various needs of the market place by employees highly qualified to sell
those products and services. During the first quarter, 1994 a second
Overdraft Line of Credit product was approved to be offered to customers.
The product will be used to attract the 30-45 age group that have expressed
a desire for overdraft protection.
In November of 1993 an Automated Teller Machine was located in the
Wal-Mart store located at Highway 78 North, Dyersburg, Tennessee. Also
during 1993 the Bank purchased property at Community Park Road and Route
211, Dyersburg, Tennessee to construct a full service branch bank. The
Branch is expected to be in operation during the third quarter, 1994.
<PAGE>
<PAGE> 9
The following table compares year-to-date non-interest income, and
expense of First Citizens as of March 31, 1992, 1993 and 1994:
Non-Interest Income
(in thousands)
March 31
% of % of
1994 Change 1993 Change 1992
Service Charges on Deposit
Accounts $113 8.65% $104 (1%) $105
Other Income $534 46.70% $364 48.57% $245
Trust Income $127 41.11% $ 90 2.23% $ 88
TOTAL NON-INTEREST INCOME $774 38.71% $558 27.40% $438
Total Non-Interest Income was up 38.71% and 27.40% when viewing the years
under comparison. Service charge income on deposit accounts improved 8.65%
when comparing March 31, 1994 to March 31, 1993. The additional income was
derived from the collection of Overdraft fees. Trust income improved
41.11% over 1992 total. In the first quarter of last year, new leadership
was placed in charge of the Investment Management and Trust Services
Division in an effort to improve the service as well as the profitability
of the department.
Non-Interest Expense
(in thousands)
March 31
% of % of
1994 Change 1993 Change 1992
Salaries & Employee
Benefits $1,173 4.64% $1,121 2.66% $1,092
Net Occupancy Expense $ 158 8.97% $ 145 (61.13%) $ 373
Other Operating Expense 785 (2.61%) $ 806 21.75% $ 662
TOTAL NON-INTEREST EXPENSE $2,116 2.12% $2,072 (2.59%) $2,127
A 61% decrease in net occupancy expense in 1992 is attributed to the
computer conversion completed in September, 1992. A cost reduction of
$226,000 in net occupancy expense was accomplished as a result of this
change. The reduction was partially offset by an increase of $59,000 in
depreciation costs as the result of purchasing both hardware and software
for the new in-house system. The decrease when comparing other operating
expense for 1994 to 1993 is evidence of efforts to control all non-interest
expense. Salaries and benefits reflect a continuous effort to increase
salaries and benefits at a manageable level while reducing FTE to be more
in line with peer group levels. Fulltime equivalent employees as of March
31, 1994 was 145 compared to 151 and 161 in 1993 and 1992 respectively. It
is expected that the fulltime equivalent ratio will increase slightly
during the second quarter. In May, 1994 parttime employees will be hired
to replace full time workers during vacations. Also 4 additional parttime
tellers will be hired to complete the bank's teller training program and
will be placed at the Industrial Park Branch during the third quarter.
Procedures are in place to continuously monitor the fulltime equivalent in
order to maintain staffing levels comparable to peer group banks. However,
it is conceivable that the FTE ratio will remain higher than peer group
banks because of increased staff necessary to support extended banking
hours and additional services offered to our customers that are not offered
by many peer group banks. Additional services include a Trust Department,
in-house Data Processing and a Mortgage Lending Department.
DEPOSITS
The average daily amount of deposits and average rates paid on such
deposits are summarized for the quarters ending March 31 for the years
indicated:
<PAGE>
<PAGE> 10
COMPOSITION OF DEPOSITS
(in thousands)
1994 1993 1992
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
Non Interest
Bearing Demand
Deposits $ 24,667 - $ 21,093 - $ 17,320 -
Savings Deposits $ 65,730 2.54% $ 65,019 2.57% $ 56,368 3.45%
Time Deposits $104,718 4.51% $104,456 4.72% $115,578 5.91%
TOTAL DEPOSITS $195,115 3.58% $190,568 3.84% $189,266 4.63%
Totals Deposits grew $4,547,000 during the first quarter, 1994 when
compared to the same time period in 1993. An analysis of prior years is
reflective of customer response to the low interest rates paid on deposits
in '92 and '93. The reluctance to recommit funds into certificates of
deposits had the ultimate effect of reducing time deposits by 10.64% when
comparing 1993 to 1992. However, when analyzing 1994 compared to 1993 a
marginal growth rate is reflected. Non Interest Bearing Demand Deposits
have increased approximately $7,347,000 since 1992. One factor that is not
evident when reviewing all categories within the table is the change in
"Sweep Account Funds." Large balance customers are offered a service which
provides for funds to automatically sweep daily from a demand deposit
account into an overnight repurchase agreement. This affords commercial
customers the opportunity to earn interest on excess collected funds while
providing availability of adequate funds to clear large denomination checks
when presented for payment. The sweep balances as of March 31, 1994, 1993
and 1992 were $13,084,636, $16,144,000, and $7,882,000 respectively.
Approximately $5 million was converted from sweep funds to assets in the
bank's Investment Management and Trust Services Department during the third
quarter, 1993. Deposit rates are projected to slightly increase during
1994 therefore enhancing the appeal of the bank's certificate of deposit as
an investment option.
The following tables set forth the maturity distribution of
Certificates of Deposit and other time deposits of $100,000.00 or more
outstanding on the books of First Citizens on March 31, 1994. The overall
totals were virtually unchanged from 1993 totals.
Maturity Distribution Of Time Certificates Of Deposit
In Amounts of $100,000.00 Or More As Of March 31, 1994
(in thousands)
Maturity Total Amount
3 months or less $ 7,531
3 through 6 months $ 3,300
6 through 12 months $ 1,854
over 12 months $ 4,107
Total $16,792
A summary of average interest earning assets and interest-bearing
liabilities is set forth in the following table together with average
yields on the earning assets and average costs on the interest bearing
liabilities. The following tabular analysis compares average balances and
average yields for the quarters ending March 31, 1994, 1993 and 1992.
Continued improvement in the annualized net yield on average earning
assets is attributable to lower interest rates and success in growing
interest earning assets at a rate more favorable proportionately than
growth of interest bearing liabilities. A comparison reflects improvement
from 4.43% in 1992 to 4.76% in 1993 and a reduction to 4.50% in 1994.
While maintaining the level achieved in 1993 could prove difficult in the
projected rising rate environment, sound asset liability management
guidelines should protect the company from volatile savings in future
yields.
<PAGE>
<PAGE> 11
<TABLE>
First Citizens National Bank
Quarter Ending March 31
Monthly Average Balances and Interest Rates
(in thousands)
<CAPTION>
1994 ______ 1993____________ 1992____________
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) $149,378 $3,274 8.77% $132,481 $3,223 9.73% $129,682 $3,399 10.49%
Investment Securities:
Taxable $ 47,168 $ 707 6.00% $ 67,381 $1,012 6.00% $ 58,646 $1,048 7.15%
Tax Exempt (2) $ 13,005 $ 146 4.49% $ 9,097 $ 98 4.31% $ 4,351 $ 59 5.43%
Interest Earning
Deposits $ 199 $ 1 2.01 $ 184 $ 1 2.17% $ 127 $ 1 3.15%
Federal Funds Sold $ 5,765 $ 47 3.26% $ 4,262 $ 34 3.19% $ 10,137 $ 100 3.95%
Lease Financing $ 60 $ 1 6.67% $ 83 $ 2 9.64% $ 136 $ 3 8.83%
Total Interest
Earning Assets $215,575 $4,176 7.75% $213,488 $4,370 8.19% $203,079 $4,610 9.08%
NON-INTEREST
EARNING ASSETS:
Cash and Due From
Banks $ 8,579 $ - - $ 7,830 $ - - $ 6,931 $ - -%
Bank Premises and
Equipment $ 7,985 $ - - $ 7,979 $ - - $ 7,301 $ - -%
Other Assets $ 3,217 $ - - $ 3,776 $ - - $ 5,451 $ - -%
Total Assets $235,356 $ - - $233,073 $ - - $222,762 $ - -%
LIABILITIES AND
SHAREHOLDERS' EQUITY:
INTEREST BEARING
LIABILITIES:
Savings Deposits $ 65,730 $ 418 2.54% $ 65,019 $ 418 2.57% $ 56,368 $ 485 3.45%
Time Deposits $104,718 $1,182 4.51% $104,456 $1,233 4.72% $115,578 $ 1,706 5.91%
Federal Funds
Purchased and
Other Interest
Bearing Liabilities $ 18,899 $ 151 3.20% $ 23,223 $ 178 3.06% $ 14,622 $ 171 4.68%
Total Interest
Bearing Liabilities $189,347 $1,751 3.70% $192,698 $1,829 3.80% $186,568 $ 2,362 5.07%
<PAGE>
<PAGE> 12
NON-INTEREST
BEARING LIABILITIES:
Demand Deposits $ 24,625 $ - -% $ 21,029 $ - -% $ 17,313 $ - -%
Other Liabilities $ 1,691 $ - -% $ 1,731 $ - -% $ 2,832 $ - -%
Total Liabilities $215,663 $ - -% $215,458 $ - -% $206,713 $ - -%
SHAREHOLDERS'
EQUITY $ 19,693 $ - -% $ 17,615 $ - -% $ 16,049 $ - -%
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $235,356 $ - -% $233,073 $ - -% $222,762 $ - -%
NET INTEREST
INCOME $ - $2,425 -% $ - $2,541 -% $ - $2,248 -%
NET YIELD ON
AVERAGE EARNING
ASSETS $ - $ - 4.50% $ - $ - 4.76% $ - $ - 4.43%
(Annualized)
</TABLE>
(1) Loan totals are shown net of interest collected, not earned and
Loan Loss Reserve.
(2) Nonaccrual loans are included in average total loans.
(3) Loan Fees are included in interest income and the computations of
the yield on loans. Overdraft fees are excluded.
(4) Interest and rates on securities which are non-taxable for
Federal Income Tax purposes are not presented on a taxable
equivalent basis.
COMPOSITION OF LOANS
Loan Portfolio totals increased in excess of $13 million and $6
million when comparing the period ending March 31 for the previous three
years. All categories listed within the comparison table reflect moderate
growth from 1993 to 1994 with the greater amount of $8,578,000 centered in
Commercial, Financial, and Agricultural Loans. Installment Loans to
Individuals increased approximately $1,236,000 in 1994 after a steady
decrease since 1991. This is reflective of a change in the bank's
strategic plan to more aggressively seek quality installment loans to place
in the portfolio. In 1991 management made a decision to strengthen
controls on consumer loans to reduce risk and to limit loan losses. Loan
growth was in excess of 1993 budget projections due to the low interest
rate environment that prompted customers to purchase or refinance real
estate. In addition, commercial customers secured outstanding debt with
real estate to take advantage of low rates and longer repayment terms. The
1994 budget projects moderate loan growth. The Officer call program
directs loan officers to aggressively seek quality new loan business as
well as maintain quality customer relationships.
The local economy continues to perform better than other areas of
Tennessee as a result of diversification. Several unrelated industries and
an excellent agricultural base provide stability not present in less
diversified economies.
<PAGE>
<PAGE> 13
The average yield on loans of First Citizens National Bank as of March
31 in the years indicated is as follows:
Year Yield
1994 8.77%
1993 9.73%
1992 10.49%
1991 11.98%
1990 12.56%
The aggregate amount of unused guarantees, commitments to extend
credit and standby letters of credit was $52,922,000 as of 3/31/94.
The following table sets forth loan totals net of unearned income by
category for the past five years:
March 31
(in thousands)
1994 1993 1992 1991 1990
Real Estate Loans:
Construction $ 7,598 $ 7,003 $ 4,088 $ 4,927 $ 5,562
Mortgage $ 90,537 $ 87,864 $ 77,000 $ 70,957 $ 68,100
Commercial, Financial
and Agricultural Loans $ 35,784 $ 27,206 $ 33,425 $ 36,885 $ 30,168
Installment Loans to
Individuals $ 16,212 $ 14,976 $ 15,723 $ 17,349 $ 16,603
Other Loans $ 2,711 $ 2,119 $ 2,507 $ 2,570 $ 3,957
TOTAL LOANS $152,842 $139,168 $132,743 $132,688 $124,390
LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
Managing interest rate risk is a primary objective of asset-liability
management. One tool utilized by First Citizens to ensure market rate
return is variable rate loans. Loans totaling $64,272,000 (42% of total
portfolio) are subject to repricing within one year or carry a variable
interest rate. This ratio is down from 47% as of 3/31/93 and 63% as of
3/31/92 which reflects efforts of the customer base to lock in the lower
rates now available. The offsetting variance is in the one to five year
category where totals increased from $89,199,000 at 3/31/93 to $101,121,000
at quarter end. While growth in the portfolio is an objective, our first
priority is ensuring credit quality. Management considers the portfolio
composition to be diversified, with no concentrations in any one industry.
Due after
Due in one one year but Due after
year or less within five years five years
(in thousands)
Real Estate $14,592 $68,156 $15,387
Commercial, Financial
and Agricultural $15,059 $17,918 $ 2,807
All Other Loans $ 3,857 $15,047 $ 19
TOTAL $33,508 $101,121 $18,213
Loans with Maturities After One Year for which:
(in thousands)
Interest Rates are Fixed or Predetermined $88,570
Interest Rates are Floating or Adjustable $30,764
<PAGE>
<PAGE> 14
NON-PERFORMING ASSETS
Non-Performing loans indicate continuous improvement when analyzing
the years under comparison. At March 31, 1994, loans 90 days past due and
still accruing interest increased $278,000, while non accrual loan totals
dropped $466,000 causing a reduction in total non-performing loans of
$188,000. This reduction is a direct result of improved portfolio quality.
Non-Performing loans are slightly below peer group comparisons.
Categorization of a loan as non-performing is not in itself a reliable
indicator of potential loan loss. Other factors, such as the value of
collateral securing the loan and the financial condition of the borrower
must be considered in judgements as to potential loan loss. 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 three months ending 3/31/94 if all loans
reported as non-accrual had been current in accordance with their original
terms and had been outstanding throughout the period is $23,000. Interest
income on loans reported as ninety days past due and on interest accrual
status was $10,000 for year-to-date 1994. 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". Restructured loan totals at March
31, 1994 are zero.
Loans classified by regulatory examiners and not reported under non-
accrual, past due or restructured pose no significant credit problems.
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 reevaluated at regular intervals for
effectiveness.
The portfolio contained no loans renegotiated to provide a reduction
or deferral of interest or principal because of a deterioration in the
financial position of the borrower as of March 31 for the years under
comparison.
The following table sets forth the balance of non-performing loans as
of March 31, for the years indicated:
Non-Performing Loans
March 31
(in thousands)
90 Days Past Due
Year Non-Accrual Accruing Interest Total
1994 $1,051 $ 439 $1,490
1993 $1,517 $ 161 $1,678
1992 $1,952 $1,136 $3,088
1991 $1,750 $ 691 $2,441
1990 $ 436 $ 704 $1,140
LOAN LOSS EXPERIENCE AND
RESERVES FOR LOAN LOSSES
During the quarter just ended activity to the Reserve account
consisted of (1) Loans charged off - $24,000, (2) Recovery of loans
previously charged off - $44,000, and (3) Additions to reserve - $99,000.
Recovery of loans previously charged off have exceeded loans charged off
for the quarters ending 3/31/94 and 3/31/93. This is evidence of improved
quality in the loan portfolio when compared to previous years included in
the table.
<PAGE>
<PAGE> 15
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 reports are presented to the board at its meeting immediately
preceding quarter-end. This reporting process provides timely information
to the Board in order that a determination may be made on the adequacy of
the Reserve prior to quarter-end.
The 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.
For analysis purposes the loans reviewed will be 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 effort 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 for either principal or interest 90 days, placed on non-accrual or
renegotiated status, renewed four times without principal reduction,
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.
Since all future losses cannot be identified with complete accuracy,
in addition to the specific allocation to individual loans, a minimum of
30% of the allowance for Loan and Lease Loss Reserve must be allocated to
general risk (unallocated).
Management estimates the approximate amount of charge-offs for the 12
month period ending 12/31/94 to be as follows:
Domestic Amount
Commercial, Financial & Agricultural $100,000
Real Estate-Construction None
Real Estate-Mortgage 70,000
Installment Loans to individuals & credit cards 80,000
Lease financing None
Foreign N/A__
01/01/94 through 12/31/94 Total $250,000
The book value of repossessed real property held by Bancshares was
$783,000 and $1,838,000 at 3/31/94 and 3/31/93 respectively. The balance
was significantly reduced as a result of the sale of property in December,
1993 valued at $1,055,000. The only other property held on the books of
bancshares is a strip shopping center valued at $685,000. The remaining
balance represents other real estate which is held by First Citizens
National Bank. Efforts to market the property held by the holding company
are on-going.
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.
<PAGE>
<PAGE> 16
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.
The following table summarizes the monthly average of 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.
<TABLE>
First Citizens National Bank
Loan Loss Experience and Reserve for Loan Losses
(in thousands)
Quarter ending March 31
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Average Net Loans
Outstanding $149,438 $132,564 $129,818 $128,671 $121,218
Balance of Reserve
for Loan Losses
at Beginning of
Period $ 1,676 $ 1,703 $ 1,936 $ 1,914 $ 1,371
Loan Charge-Offs $ (24) $ (26) $ (307) $ (123) $ (93)
Recovery of Loans
Previously Charged Off $ 44 $ 38 $ 38 $ 37 $ 51
Net Loans Charged Off $ 20 $ 12 $ (269) $ (86) $ (42)
Additions to Reserve
Charged to Operating
Expense $ 99 $ 117 $ 131 $ 213 $ 105
Balance at End of
Period $ 1,795 $ 1,832 $ 1,798 $ 2,041 $ 1,434
Ratio of Net Charge-Offs
during quarter to Average
Net Loans Outstanding .01% .01% (.21%) (.07%) (.03%)
</TABLE>
The following table will identify charge-offs by category for the
periods ending 3/31/94, 3/31/93 and 3/31/92:
Charge-offs: 1994 1993 1992
Domestic:
Commercial, Financial and Agricultural $ 0 $ 0 $210
Real Estate-Construction 0 0 0
Real Estate-Mortgage 0 0 50
Installment Loans to individuals 24 26 47
Lease financing 0 0 0
Foreign N/A N/A N/A
Total $ 24 $ 26 $307
Recoveries:
Domestic:
Commercial, Financial and Agricultural $ 16 $ 3 $ 3
Real Estate-Construction 0 0 0
Real Estate-Mortgage 2 1 4
Installment Loans to individuals 26 34 31
Lease Financing 0 0 0
Foreign N/A N/A N/A
Total $ 44 $ 38 $ 38
Net Charge-offs $ 20 $ 12 $(269)
*Recoveries exceeded Charge-offs
<PAGE>
<PAGE> 17
Investment Securities
The book value of listed investment securities as of the dates
indicated are summarized as follows:
Composition of Investment Securities
(March 31)
1994 1993 1992 1991 1990
U. S. Treasury & Government Agencies $42,353 $61,068 $55,020 $46,856 $52,015
State & Political Subdivisions $13,665 $ 9,057 $ 5,446 $ 6,625 $ 7,574
All Others $ 5,519 $ 5,645 $ 3,944 $ 5,880 $ 5,222
TOTALS $61,537 $75,770 $64,410 $59,361 $64,811
The investment portfolio serves a primary role in the overall context
of balance sheet management. It provides a stable, longterm income stream
and is managed in such a way as to enhance the Company's asset/liability
management program. Investment securities serve as collateral for
government and other public fund deposits. Securities contained within the
portfolio consist primarily of U. S. Treasury, and other U. S. Government
Agency securities and tax-exempt obligations of states and political
subdivisions. All other investment securities contained therein comprise
approximately 8.99% of the portfolio. The Asset/Liability Management
Committee continuously monitors the need for tax free investments as well
as setting guidelines for the term of investment maturities. Tax Free
Investments increased 66% from 1st quarter 1992 to 1st quarter, 1993 as a
conscious effort to reduce tax liability. In light of current rising
interest rates, caution will be used when purchasing investments with
maturities longer than 7 years.
Investment activity for the first quarter was curtailed by a strong
loan demand and the implementation of the Financial Accounting Standard No.
115 which addresses Accounting for Certain Investments in Debt and Equity
Securities. FASB 115 requires that banks maintain separate investment
portfolios for Held-to Maturity, Available-for-Sale, and Trading Account
Investments. As of 3/31/94 approximately 26% of total investments were
booked in the Available-for-Sale portfolio. The remaining 74% was placed
in the Held to Maturity category. 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 investments are stated at
amortized cost on the balance sheet. Mark to Market had a positive after
tax impact of $54,000 to the capital account at 3/31/94.
During the quarter just ended there were no transfers between the
Trading, Available for Sale, and Investment Accounts. The Trading Account
for the entire quarter maintained a zero balance.
<PAGE>
<PAGE> 18
Investment Securities
Held to Maturity Available for Sale
March 31, 1994
(in thousands)
Amortized Fair Amortized Fair
Cost Value Cost Value
U.S. Treasury Securities $ 8,554 $ 8,524 $ 6,075 $ 6,109
U.S. Government agency
and corporation obligations
(exclude mortgage-backed
securities):
Issued by U.S. Government
agencies (2) 753 755 0 0
Issued by U.S. Government-
sponsored agencies (3) 15,584 15,540 2,000 2,044
Securities issued by states
and political subdivisions
in the U.S.:
General obligations 5,539 5,486 1,542 1,542
Revenue obligations 4,484 4,470 1,466 1,469
Industrial development and
similar obligations 0 0 628 628
Mortgage-backed securities (MBS):
Pass-through securities:
Guaranteed by GNMA 773 786 440 438
Issued by FNMA and FHLMC 3,809 3,869 0 0
Privately-issued 0 0 0 0
CMOs and REMICs:
Issued by FNMA and FHLMC 3,350 3,221 960 939
Privately-issued and
collateralized by MBS
issued or guaranteed by
FNMA, FHLMC, or GNMA 600 623 0 0
All other privately-issued 0 0 0 0
Other debt securities:
Other domestic debt securities 1,802 1,829 1,054 1,081
Foreign debt securities 0 0 0 0
Equity securities:
Investments in mutual funds - - 0 0
Other equity securities with
readily determinable fair
values - - 2,029 2,036
All other equity securities (1) - - 0 0
Total 45,248 45,103 16,194 16,289
(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.
<PAGE>
<PAGE> 19
<TABLE>
Maturity and Yield on Securities March 31, 1994
(in thousands)
<CAPTION>
Maturing
After One Year After Five Years After
Within One Year Within Five Years Within Ten Years Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U. S. Treasury and
Government Agencies $10,958 6.22% $23,468 5.66% $ 3,176 5.59% $ 4,751 6.10%
State and Political
Subdivisions* $ 1,924 6.78% $ 9,676 6.96% $ 2,065 6.83% $ - -%
All Others $ 1,833 8.93% $ 3,086 6.17% $ 600 9.14% $ - -%
TOTALS $14,715 6.63% $36,230 6.05% $ 5,841 6.40% $ 4,751 6.10%
</TABLE>
* Yields on tax free investments are stated herein on a taxable equivalent
basis.
Return on Equity and Assets
The table below presents for Bancshares certain operating ratios
for the quarters ending March 31st: (Not Annualized)
1994 1993 1992 1991 1990
Percentage of Net Income to:
Average Total Assets .35% .32% .17% .18% .27%
Average Shareholders Equity 3.74% 3.84% 2.14% 2.42% 3.84%
Percentage of Dividends Declared
Per Common Share to Net Income
Per Common Share 22.73% 22.41% 38.89% 35.90% 23.77%
Percentage of Average Shareholders'
Equity** to Average Total Assets 10.03% 9.10% 8.76% 8.30% 7.66%
Improved earnings performance is evident when reviewing the following
table. The "domino effect" is seen in return on assets and equity, and in
improved capital ratios. The company's Strategic Plan addresses objectives
to sustain improved earnings, maintain a quality loan portfolio, and to
maintain market share by providing quality customer service. Management of
the Bank is committed to improving and maintaining earnings that are
comparable to peer banks. Ratios comparing net income to average total
assets and average shareholders equity indicate improvement from prior
years. Budget projections for Return on Assets at 12/31/94 is a minimum of
one percent.
Percentage of Dividends declared per common share to net income per
common share decreased from 35.90% and 38.89% in 1992 and 1993 respectively
to 22.41% in 1994. While dividends per share have trended upward, improved
earnings serve to reduce the comparative ratio. A 10 percent stock divided
declared on October 21, 1992 was payable to shareholders of record December
15, 1992, thereby increasing outstanding shares. Earnings per share were
adjusted accordingly.
During the third quarter, 1993, a 2.5 for 1 stock split was declared
to holders of record as of October 15, 1993 on the common capital stock of
Bancshares. The number of shares outstanding increased proportionately
with no effect on capital.
An amendment to the Company's Charter by the shareholders in April,
1994 approved an increase in the number of shares authorized from 750,000
to 2,000,000.
** Represents primary capital--including Reserve for Loan Losses account.
<PAGE>
<PAGE> 20
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 risks. The
liquidity ratio which is determined by a comparison of net liquid assets to
net liabilities remains between 10% and 15%. The stability of our deposit
base, sound asset/liability management, a strong capital base and quality
assets assure adequate liquidity. The low interest rate environment has
placed pressure on the ability to retain funds in maturing certificates of
deposit. Many of our customers are, for the first time, looking outside
the traditional bank investment options and investing in annuities, mutual
funds and stocks. Deposits of $100,000 and over tend to be much more
volatile and interest sensitive than smaller consumer deposits which make
up the major portion of our deposit base.
Another factor which must be addressed in the current interest rate
situation is the inclination of our customers to lock in rates for longer
periods of time. In excess of $20,000,000 in loans shifted from less than
one year maturity to the one to five year category. Sound asset/liability
management principals would dictate that investments should and do follow
this trend. To address liquidity concerns, First Citizens became a member
of the Federal Home Loan Bank, thereby opening up an additional liquidity
source should the need arise.
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 in the present interest rate environment. This is
the primary objective of the asset/liability management program.
The following condensed gap report provides an analysis of interest
rate sensitivity of earning assets and interest bearing liabilities. First
Citizens Asset-Liability Management Policy provides that the cumulative gap
as a percent of assets shall not exceed 10% for categories up to 12 months
and one to two year categories and 20% for categories in excess of one
year. As evidenced by the following table, our current position is
significantly below this level, with annual income exposure determined to
be $50,000 to $89,000.
<PAGE>
<PAGE> 21
<TABLE>
CONDENSED GAP REPORT
--------------------
CURRENT BALANCES
--------------------
03/31/94
(in thousands)
<CAPTION>
DAILY 0-1 1-2 2-3 3-6 6-12 1-2 2+
TOTAL FLOATING MONTH MONTHS MONTHS MONTHS MONTHS YEARS YEARS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CASH AND DUE FROM
CURRENCY AND COIN 2,339 - - - - - - - 2,339
DUE FROM BANKS 2,495 - - - - - - - 2,496
CASH ITEMS 4,549 4,549
TOTAL CASH & DUE FROM 9,383 - - - - - - - 9,383
INVESTMENTS
U.S. TREASURIES 14,663 - 34 2,000 - 3,000 1,000 2,000 6,629
U.S. AGENCIES 27,692 - 2,342 - 401 2,500 2,440 1,500 18,509
MUNICIPALS 13,664 - 6 - 150 168 1,600 2,905 8,835
TRADING ACCOUNT 606 - 6 - - - - - 600
CORP & OTHERS 3,674 - 27 - - - 1,800 - 1,847
FEDERAL HOME LOAN BANK 1,238 - - - - - - - 1,238
TOTAL INVESTMENTS 61,537 - 2,415 2,000 551 5,668 6,840 6,405 37,658
LOANS
COMMERCIAL FIXED 18,866 - 976 366 726 2,253 4,334 1,957 8,254
COMMERCIAL VARIABLE 15,867 15,867 - - - - - - -
REAL ESTATE VARIABLE 19,964 19,964 - - - - - - -
REAL ESTATE FIXED 70,837 - 2,870 690 633 2,758 3,995 3,502 56,399
HOME EQUITY LOANS 4,552 4,527 - - - - - - -
SEC MORTGAGE 441 - 441 - - - - - -
INSTALLMENT LOANS 16,180 - 258 242 227 476 1,558 2,534 10,885
INSTALLMENT VARIABLE 32 32 - - - - - - -
FLOOR PLAN 885 - 885 - - - - - -
CREDIT CARDS 1,647 - - - - - - 1,647 -
OVERDRAFTS 179 - 305 - - - - - -
NON-ACCRUAL LOANS 1,051 - - - - - - - 1,051
FHLB LOANS 2,341 - - - - - - - 2,341
TOTAL LOANS 151,842 40,415 5,609 1,298 1,586 5,487 9,877 9,640 78,930
LOAN LOSS RESERVE 1,795 - - - - - - - 1,795
NET LOANS 151,047 40,415 5,609 1,299 1,586 5,487 9,877 9,640 77,135
FED FUNDS SOLD 4,575 4,575
TOTAL EARNING ASSETS 217,159 44,990 8,024 3,298 2,137 11,155 16,717 16,045 114,793
OTHER ASSETS
BUILDING, F&F AND LAND 7,970 - - - - - - - 7,970
OTHER REAL ESTATE 98 - - - - - - - 98
OTHER ASSETS 2,955 - - - - - - - 2,955
TOTAL OTHER ASSETS 11,023 - - - - - - - 11,023
TOTAL ASSETS 237,565 44,990 8,024 3,298 2,137 11,155 16,717 16,045 135,199
DEMAND DEPOSITS
BANKS 39 - - - - - - - 39
DEMAND DEPOSITS 24,384 - - - - - - - 24,384
OFFICIAL CHECKS 1 - - - - - - - 1
TOTAL DEMAND 24,424 - - - - - - - 24,424
</TABLE>
<PAGE>
<PAGE> 22
<TABLE>
CONDENSED GAP REPORT
--------------------
CURRENT BALANCES
--------------------
<CAPTION>
03/31/94
(in thousands)
DAILY 0-1 1-2 2-3 3-6 6-12 1-2 2+
TOTAL FLOATING MONTH MONTHS MONTHS MONTHS MONTHS YEARS YEARS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAVINGS ACCOUNTS
REGULAR SAVINGS 18,679 - - - - - - 6,226 12,453
NOW ACCOUNT 26,839 - - - - - - 8,946 17,893
IMF-MMDA 11,648 - - - - - - 11,648 -
HIGH YIELD ACCOUNT 3,031 - 3,031 - - - - - -
GENERATIONS GOLD 4,842 - - - - - - - 4,842
TOTAL SAVINGS 65,039 - 3,031 - - - - 26,820 35,188
TIME DEPOSITS
FLEX-CD 72,685 - 10,411 9,324 6,545 15,104 8,585 12,738 9,978
LARGE CD-FLEX 16,792 - 4,130 2,096 1,305 2,797 2,357 2,557 1,550
IRA-FLOATING 257 257 - - - - - - -
IRA-FIXED 16,041 - 957 833 412 1,579 2,158 2,624 7,478
CHRISTMAS CLUB 155 - - - - - 155 - -
TOTAL TIME 105,930 257 15,498 12,253 8,262 19,480 13,255 17,919 19,006
TOTAL DEPOSITS 195,393 257 18,529 12,253 8,262 19,480 13,255 44,739 78,618
SHORT TERM BORROWINGS
TT&L 639 639 - - - - - - -
SECURITIES SOLD-SWEEP 11,039 11,039 - - - - - - -
SECURITIES SOLD-FIXED 6,821 - 595 2,315 200 2,841 - 600 280
FEDERAL HOME LOAN BANK 6,787 - - - - - - - 2,325
TOTAL SHORT TERM BORR. 25,447 11,678 595 2,315 200 2,841 - 600 2,605
OTHER LIABILITIES
ACCRUED INT PAYABLE 1,109 - - - - - - - 1,109
OTHER LIABILITIES 199 - - - - - - - 199
TOTAL OTHER LIAB. 1,308 - - - - - - - 1,308
TOTAL LIABILITIES 217,525 11,835 19,114 14,568 8,462 22,321 13,255 45,339 82,531
CAPITAL
COMMON STOCK 2,000 - - - - - - - 2,000
SURPLUS 4,000 - - - - - - - 4,000
UNREALIZED GAIN(LOSSES) 57 - - - - - - - 57
UNDIVIDED PROFITS 13,983 - - - - - - - 13,983
TOTAL CAPITAL 20,040 - - - - - - - 20,040
TOTAL LIAB. & CAPITAL 237,585 11,935 19,114 14,668 8,462 22,321 13,255 45,339 102,571
GAP (SPREAD) - 33,055 -11,090 -11,270 -6,325 -11,166 3,462 -29,294 32,628
GAP % TOTAL ASSETS - 13.91 -4.67 -4.74 -2.66 -4.70 1.46 -12.33 13.73
CUMULATIVE GAP - 33,055 21,965 10,695 4,370 -6.796 -3,334 -32,628 -
CUMM. GAP % TOTAL ASSETS - 13.91 9.25 4.50 1.84 -2.86 -1.40 -13.73 -
SENSITIVITY RATIO - 3.77 1.71 1.23 1.08 0.91 0.96 0.76 1.00
</TABLE>
<PAGE>
<PAGE> 23
Capital Resources
Total shareholders' equity of First Citizens Bancshares as of March
31, 1994, was $22,469,000. Capital as a percentage of total assets for the
quarter ending March 31 is presented in the following table for the years
indicated (excluding Loan Loss Reserves):
1994 1993 1992 1991 1990
9.37% 8.41% 7.87% 7.45% 7.12%
Increasing the capital base of the Company is a vital part of
strategic planning. Although the present capital to asset ratio remains
well in excess of the level required by Regulators for banks our size,
management is aware of the importance of strengthening this base.
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 established by the Federal Reserve is 8.00 percent. 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 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'
capital consists entirely of Tier 1 components, with the exception of the
allowance for loan and lease losses.
Bancshares has historically maintained capital in excess of minimum
levels established by the Federal Reserve Board. The risk-based capital
ratio reflects continuous improvement when reviewing the years included in
the above table. Risk-based capital ratio as of 3/31/94 was 14.17%,
significantly in excess of the 8.00 percent mandated by the Regulatory
Authorities. 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.
Effects of Inflation
Inflation has a significant impact on the growth of total assets in
the banking industry, resulting in a need to increase equity capital in
order to maintain an appropriate equity to asset ratio.
Operating expenses are directly affected by increases in salaries and
employee benefits, supplies, legal, audit and professional fees, utilities,
advertising and insurance. Now that interest rates have been deregulated,
inflation and competition are major keys to the cost of acquiring and
retaining deposits.
A well managed asset/liability management program can maximize net
interest income; and at the same time, reduce the impact of inflation on
earnings.
<PAGE>
<PAGE> 24
Part II - Other Information
Item 1. Legal Proceedings
Information dealing with legal proceedings as disclosed in Part I, Item 1,
in Footnote five (5) of the notes to financial statements is incorporated
herein by reference.
Item 2. Changes in Securities
Dividends paid to Shareholders of First Citizens Bancshares, Inc. are
funded by dividends to the Bank Holding Company from First Citizens
National Bank. Federal Reserve Bank regulators would be critical of a bank
holding company that pays cash dividends that are not covered by earnings
or that are funded from borrowings or unusual or non recurring gains, such
as the sale of property or assets. Under rules set forth by the
Comptroller of the Currency in Interpretive Ruling 7.6100, the board of
directors of a national bank may declare dividends as it may judge to be
expedient, subject to statutory limitations which deal with the balance of
the surplus account, sufficiency of net profits, dividend payments on
preferred stock, and default of any assessment due to the Federal Deposit
Insurance Corporation.
Item 6(b) No reports on Form 8-K were filed for the quarter ended 3/31/94.
<PAGE>
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
First Citizens Bancshares, Inc.
(Registrant)
Date: May 13, 1994 Stallings Lipford
Stallings Lipford, Chairman &
CEO
Date: May 13, 1994 Jeff Agee
Jeff Agee, Vice President &
Chief Financial Officer
First Citizens National Bank
(Principal Subsidiary)
<PAGE>
<PAGE> 1
<TABLE>
DATA STATED IN THOUSANDS
<CAPTION>
VOLUNTARY SCHEDULE - CERTAIN FINANCIAL INFORMATION
REGULATION STATEMENT CAPTION FIRST QTR. FIRST QTR. TO DATE
1994 1993 1994 1993
<S> <C> <C> <C> <C>
5-02 (1) Cash and Cash Items 15416 10036 15416 10036
5-02 (2) Marketable Securities 61537 75770 61537 75770
5-02 (3)(b)(1) Notes Receivable 152842 139168 152842 139168
5-02 (4) Allowance for Doubtful Accounts 1795 1832 1795 1832
5-02 (15) Total Assets 239918 237044 239918 237044
5-02 (24) Other Liabilities 217449 217113 217449 217113
5-02 (30) Common Stock 7065 2799 7065 2799
5-02 (31)(a)(2) Additional Capital Other 2370 6425 2370 6425
5-02 (31)(a)(3)(ii) Retained Earnings - Unappropriated 13034 10707 13034 10707
5-03 (b)(1)(e) Other Revenues 5132 5070 5132 5070
5-03 (b)(2)(e) Cost of Other Revenues 2215 2189 2215 2189
5-03 (b)(8) Interest and Amortization of
Debt Discount 1747 1829 1747 1829
5-03 (b)(10) Income Before Taxes and Other Items 1170 1052 1170 1052
5-03 (b)(11) Income Tax Expense 343 298 343 298
5-03 (b)(14) Income/Loss from Continuing Operations 827 754 827 754
5-03 (b)(19) Net Income or Loss 827 754 827 754
</TABLE>
