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FIRST CITIZENS BANCSHARES, INC.
First Citizens Place
Dyersburg, Tennessee 38024
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 15, 1998
TO: Shareholders of First Citizens Bancshares, Inc.
Dyersburg, Tennessee 38024
Notice is hereby given that the Annual Meeting of Shareholders of
First Citizens Bancshares, Inc. will be held in the Annex of First
Citizens National Bank, Dyersburg, Tennessee, on Wednesday, April 15,
1998 at 10:00 A.M. to consider and act upon the following proposals:
1. The election of seven directors for term of three years
expiring in 2001; one director for term of two years expiring
in 2000; and one director for term of one year expiring in
1999.
2. Approval of Carmichael, Dunn, Creswell, and Sparks, CPAs as
general auditors for the year ending December 31, 1998.
3. To consider an amendment to the Company's Charter to increase
the authorized shares of common stock to 10,000,000 shares.
4. To consider and vote upon the deletion of Article 10 of the
company's charter which provides for the maximum number of
Directors to be set at twenty-two (22). (The affirmative vote
of the holders of not less than eighty percent (80%) of the
outstanding voting stock is required.)
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business February 28, 1998
are entitled to notice of and to vote at the Annual Shareholders'
Meeting.
Please date, sign and return the enclosed Proxy immediately in the
stamped envelope provided. It is important that you sign and return
the Proxy, even though you plan to attend the meeting in person. You
may revoke the Proxy at any time before the Proxy is exercised by
giving written notice to the Company or by advising us at the meeting.
If you will need special assistance at the meeting because of a
disability, please contact Judy Long, Secretary at (901) 287-4254.
This 17th day of March, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Stallings Lipford
Chairman
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FIRST CITIZENS BANCSHARES, INC.
FIRST CITIZENS PLACE
DYERSBURG, TENNESSEE 38024
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1998
SOLICITATION
THE PROXY ACCOMPANYING THIS STATEMENT IS SOLICITED BY AND ON
BEHALF OF THE BOARD OF DIRECTORS OF FIRST CITIZENS BANCSHARES, INC.
(the "Company" or "Holding Company") for use at the Annual Meeting of
Shareholders to be held April 15, 1998, and any adjournment thereof.
The time and place of the meeting is set forth in the accompanying
Notice of Meeting.
The expense of preparing, assembling, printing and mailing the
Proxy Statement and the materials used in the solicitation of Proxies
for the meeting will be borne by the Company. It is contemplated that
Proxies will be solicited principally through use of the mail, but
officers, directors and employees of the Holding Company and its
subsidiary, First Citizens National Bank (the "Bank") may solicit
Proxies personally or by telephone, without receiving special
compensation therefor. Brokers, custodians, and other like parties
will be requested to send Proxy material to beneficial owners of stock
and will be reimbursed for their reasonable expenses. It is
anticipated that this Proxy Statement and accompanying Proxy will be
mailed to shareholders on or about March 17, 1998.
All Proxies in the accompanying form which are properly executed
and returned to management will be voted in accordance with directions
given therein. Any Proxy delivered pursuant to this solicitation is
revocable, at the option of the person executing same, at any time
before it is exercised, by written notice delivered to Judy Long,
Secretary of First Citizens Bancshares, Inc. Powers of Proxy holders
will be suspended if the person executing the Proxy is present at the
meeting and elects to vote in person by advising the Chairman of the
Meeting of his/her election to vote in person, and voting in person at
the meeting.
IF NO INSTRUCTIONS ARE SPECIFIED IN YOUR PROXY WITH RESPECT TO THE
ELECTION OF DIRECTORS OR OTHER MATTERS ADDRESSED HEREIN, THE SHARES
REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR
ELECTION AS DIRECTORS AND FOR THE ELECTION OF CARMICHAEL, DUNN,
CRESWELL & SPARKS CPAS TO SERVE AS THE COMPANY'S AUDITORS FOR THE YEAR
ENDING 12/31/98 AND "FOR" THE PROPOSED AMENDMENT TO THE CHARTER OF
FIRST CITIZENS BANCSHARES, INC., AND "FOR" DELETION OF ARTICLE 10 OF
THE COMPANY'S CHARTER. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT
THE MEETING, THE PROXY WILL BE VOTED IN ACCORDANCE WITH RECOMMENDATIONS
OF THE COMPANY'S BOARD OF DIRECTORS.
VOTING SECURITIES
At the close of business December 31, 1997, there were 750,718
shares of Common Capital Stock, par value of $1.00, of First Citizens
Bancshares, Inc. outstanding and entitled to vote, as the sole class of
voting securities. On any matter submitted to a vote of the
shareholders, each holder of the Holding Company's common stock will be
entitled to one vote, in person or by proxy, for each share of common
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stock he or she held of record on the books of the Holding Company as
of February 28, 1998. Holders of common stock shall possess full
voting rights for the election of Directors and for all other purposes.
In connection with the election of Directors, shares may be voted
cumulatively if a shareholder present at the Meeting gives notice at
the Meeting prior to the voting for election of Directors, of his or
her intention to vote cumulatively. If any shareholder of the company
gives such notice, then all shareholders eligible to vote will be
entitled to cumulate their shares in voting for the election of
Directors. Cumulative voting allows a shareholder to cast a number of
votes equal to the number of shares held in his or her name as of the
Record Date, multiplied by the number of Directors to be elected.
These votes may be cast for any one nominee, or may be distributed
among as many nominees as the shareholder sees fit. If cumulative
voting is declared at the meeting, votes represented by Proxies
delivered pursuant to this Proxy Statement may be cumulated at the
discretion of the Proxy Holder, in accordance with management's
recommendation.
Tennessee Law does not provide for Dissenters Rights of Appraisal
when considering the matters as set forth herein. Holders of shares of
Common Stock will be entitled to receive dividends if and when declared
payable by the Board of Directors of First Citizens Bancshares, Inc.
Shareholders of the Company are not entitled to preemptive rights to
subscribe for or purchase securities. In the event of a liquidation,
dissolution or winding up of the affairs of the Holding Company, assets
and funds of the corporation shall be distributed, pro rata, among the
holders of Common Stock according to their respective shares.
The following table sets forth the number of shares of common
capital stock owned by Directors, Nominees and Officers of First
Citizens Bancshares, Inc. as of December 31, 1997:
Name of Beneficial Ownership Percent
Title of Class Beneficial Owners Direct Indirect of Class
Common Capital Directors, Nominees 84,760 52,791 18.00%
Stock & Executive Officers
(25)
PRINCIPAL SHAREHOLDERS
As of this date, persons or entities beneficially owning in excess
of 5% of the Common Capital Stock of First Citizens Bancshares, Inc. are
set forth in the following table:
Beneficial Ownership Percent
Title of Class Name and Address Direct Indirect of Class
Common Capital Milton Eugene Magee
Stock 421 Lattawoods
Dyersburg, TN 38024 15,667 32,179 (1) 6.37%
Common Capital Elizabeth Magee Taylor
Stock 1789 North Highland
Jackson, TN 38301 16,926 42,010 (2) 7.85%
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Common Capital First Citizens National
Stock Bank Employee Stock
Ownership Plan & Trust 168,966 22.51%
(1) Mr. Magee serves as co-trustee on various trusts with
First Citizens National Bank and/or Elizabeth Magee Taylor
representing 32,179 shares.
(2) Mrs. Taylor serves as co-trustee on 31,740 shares with Milton
Eugene Magee and/or First Citizens National Bank. Also reported as
beneficial ownership are 10,270 shares owned by Mrs. Taylor's spouse
individually, through a trust and by virtue of an affiliated interest.
ELECTION OF DIRECTORS
The present Board of Directors consists of 22 members with one-third of
the terms expiring in 1999, another one-third in 2000 and the
remaining one-third in 2001. The following individuals have been
nominated by the Board of Directors to serve a term of three years.
Once elected, each Director shall serve the stated term or until his/her
successor has met the necessary qualifications and has been elected.
Should any nominee determine that he/she is unable to serve, the persons
named in the accompanying proxy intend to vote for the balance of those
named. Director John E. Hechethorn made a decision not to run for re-
election in 1998. Mr. Heckethorn has served on the Board since 1980.
The following information sets forth the name of each nominee, age,
principal occupation for the past five years, name and business of the
corporation or other organization with which he/she is affiliated, year
of initial election to the Board, and beneficial ownership of Common
Stock of the Company as of December 31, 1997. This information is also
provided for continuing Directors whose terms expire in 1999 and 2000.
Name and Principal Occupation Director Common Stock Percent of
for Past Five Years Age Since Beneficially Owned Class
INCUMBENTS AND NOMINEES WHOSE TERMS WILL EXPIRE IN 2001
WILLIAM C. CLOAR 61 1991 3,886 *
Senior Vice President of Community
Relations, Dyersburg Fabrics, Inc.,
a textile manufacturing plant.
Previous to 1997 was Vice Pres-
ident of Training and Employee
Development. Mr. Cloar served
Dyersburg Fabrics as Vice
President of Administration from
1994 to 1995 & as Vice President
of Administration & Human Resources
prior to the year 1994.
JAMES DANIEL CARPENTER 48 1993 571 *
Partner, Flatt Heating &
Air Conditioning.
RICHARD W. DONNER 47 1985 664 *
Vice President of Sales,
Dyersburg Fabrics, Inc., a
textile manufacturing plant.
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Name and Principal Occupation Director Common Stock Percent of
for Past Five Years Age Since Beneficially Owned Class
BENTLEY F. EDWARDS 40 1997 127 *
Executive Vice President of
Burks Enterprise L.P., a
distributor of Dr. Pepper-Pepsi
Cola products. Vice President
of Marketing Burks Beverage,
L.P.
RALPH E. HENSON 56 1997 12,519 1.67%
Vice President of First Citizens
Bancshares, Inc.; February 1993,
appointed Executive Vice
President and Loan Administrator
of First Citizens National Bank.
Previous to 1993 served First
Citizens National Bank as Senior
Vice President and Senior Loan
Officer.
STALLINGS LIPFORD 67 1960 18,475 2.46%
Chairman of the Board of
First Citizens Bancshares, Inc.
and First Citizens National Bank.
Served both the Company and the
Bank as Chairman & CEO until
the year 1996. Mr. Lipford
also served as President of the
Company and Bank until April, 1992.
LARRY S. WHITE 49 1997 100 *
President of White & Associates
Insurance Agency, Inc., a general
insurance agency offering all
lines of insurance.
*Less than one percent
INCUMBENTS WHOSE TERMS WILL EXPIRE IN 2000
EDDIE EUGENE ANDERSON 50 1984 7,655 1.01%
Partner, Anderson Farms II.
Previously, Anderson Farms
until January 1, 1997.
BARRY T. LADD 57 1996 4,979 *
Executive Vice President and
Chief Administrative Officer
of First Citizens Bancshares,
Inc. and First Citizens National
Bank. Until February 1996
served the Bank as Senior Vice
President and Senior Lending
Officer.
E.H. LANNOM, JR. 73 1962 6,120 *
President, Forcum-Lannom, Inc.,
building contractor and building
materials distributor.
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Name and Principal Occupation Director Common Stock Percent of
for Past Five Years Age Since Beneficially Owned Class
MILTON E. MAGEE 61 1969 47,846 6.37%
Partner, Chic Farm Co., general
farming. Partner Magee and Taylor,
FLP, general farming since 1997.
MARY F. MCCAULEY 67 1991 381 *
Professor Emeritus, Dyersburg
State Community College.
Professor of English at DSCC
until her retirement in 1994.
G.W. SMITHEAL, III 42 1993 849 *
Partner, Smitheal Farms &
Biesel and Smitheal Cattle
Company.
P.H. WHITE, JR. 66 1978 2,593 *
Owner, P.H. White Farms,
manufacturer & distributor
of livestock insecticide
applicators.
*less than one percent
INCUMBENTS WHOSE TERMS WILL EXPIRE IN 1999
J. WALTER BRADSHAW 36 1993 6,822 *
Vice President & Director,
Bradshaw & Co. Insurors,
an independent insurance agency.
LARRY W. GIBSON 51 1995 1,275 *
President, Roberts-Gibson, Inc.,
gasoline jobber company.
L.D. PENNINGTON 69 1989 2,850 *
Chairman Emeritus of Board,
Centex Forcum-Lannom Inc., a
company of contractors,
engineers and developers.
Served as President & CEO of
Forcum-Lannom Assoc. Inc.
until 1994.
DAVID R. TAYLOR 52 1997 100 *
President & CEO of Centex Forcum
Lannom, Inc., a company of
contractors, engineers, and
developers.
DWIGHT STEVEN WILLIAMS 42 1991 345 *
Business Manager, Johnson
Funeral Home.
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Name and Principal Occupation Director Common Stock Percent of
for Past Five Years Age Since Beneficially Owned Class
KATIE S. WINCHESTER 57 1990 7,105 *
February, 1996 appointed
CEO & President of First
Citizens National Bank.
April, 1996 appointed CEO
and President of First
Citizens Bancshares, Inc.
April, 1992 to February, 1996
served as President & Chief
Administrative Officer.
Previous to 1992, Vice President
& Secretary of the Company &
Executive Vice President, Chief
Administrative Officer and
Secretary to First Citizens
National Bank.
BILLY S. YATES 72 1973 3,941 *
President, General Appliance
and Furniture Company, retail
furniture & appliance outlet.
*Less than one percent
DESCRIPTION OF THE BOARD AND ITS COMMITTEES
Each Director of First Citizens Bancshares, Inc. also serves as a
Director of First Citizens National Bank. The Board of Bancshares met
nine times during 1997 and the Board of the Bank held twelve meetings.
There were no incumbent Directors attending fewer than 75% of the
aggregate of Board and Committee meetings. There are no family
relationships between Directors, Officers, or Officers and Directors.
There were no transactions entered into between First Citizens
National Bank or First Citizens Bancshares, Inc., and Directors,
Nominees for Directors and/or Executive Officers of either the Bank or
Bancshares in which the charges involved exceeded $60,000 unless such
transactions were accomplished on the basis of competitive bidding or
were considered to be in the ordinary course of business.
The Holding Company has no specific committees. However, the
Holding Company's principal subsidiary, First Citizens National Bank,
has various committees that serve the Bank.
The Executive Committee is appointed by the Board to act on it's
behalf when the Board is unable to act as a whole. It is the
responsibility of the Executive Committee to review certain loan
applications in accordance with Loan Policy; to make recommendations to
the Board on issues affecting the operations of the Bank and to counsel
management on matters presented for committee consideration. The
Executive Committee acts as a nominating committee by considering the
performance of incumbent directors and officers and by recommending
nominations for re-election. The Executive Committee also serves as the
Investment Committee. The committee meets at such times as meetings are
called and is comprised of E. H. Lannom, Jr., Stallings Lipford
<PAGE>8
(Chairman), Milton E. Magee, L. D. Pennington, P. H. White, Jr., Katie
Winchester, and Billy S. Yates. Thirty-seven meetings were held in
1997.
The Compensation Committee is composed of five directors who are not
employees of the Bank or any of its subsidiaries. The Committee makes
recommendations to the Board of Directors as to the amount and form of
officer compensation. The compensation programs of the Bank are
designed to align compensation with business objectives and performance,
and to enable the Bank to attract, retain and reward executives who
contribute to the long term success of First Citizens Bancshares, Inc.
and its subsidiaries. Therefore, the Bank provides an executive
compensation program which includes base pay, annual cash bonuses and
retirement benefits through annual contributions to an Employee Stock
Ownership Plan. In addition all Executive Officers are provided with
permanent life insurance. Base salary is established annually based on
individual performance and pay levels of similar positions at peer
financial institutions consistent with the Tennessee Bankers Association
Annual Salary Survey. When establishing base pay, consideration is
given to both the statewide and West Tennessee average. The Committee
annually evaluates experience, individual performance and Corporate
performance when setting base pay. Base salaries for new executive
officers are initially determined by evaluating the responsibilities of
the position and the experience of the individual, and by reference to
the competitive marketplace for experienced executive talent in the
financial services industry. The Compensation Committee is made up of
the following Directors: E. H. Lannom, Jr., Milton E. Magee, Chairman,
L. D. Pennington, P. H. White, Jr., and Billy S. Yates.
The Audit Committee reviews results of audits performed by the
Bank's Internal Auditor and makes a determination as to the adequacy of
such audits. Further, this committee determines the need and frequency
for external audits, reviews engagement letters to determine the overall
effectiveness of proposed audits, and reviews results of any audit upon
completion. Based on results of these audits, this committee determines
the adequacy of existing internal controls and reports findings to the
full Board. The Audit Committee is comprised of J. Walter Bradshaw,
James D. Carpenter, Richard W. Donner, Chairman, E. H. Lannom, Jr., and
Green W. Smitheal, III. Five meetings were held during 1997.
The Trust Committee is composed of five Directors and two Trust
Officers. It is the responsibility of this committee to work with the
Trust Officers and staff to formulate policies and procedures relative
to the administering of fiduciary powers; to accept or reject all
executorships, trusteeships, and other fiduciary relationships of the
bank; and to invest, retain, or dispose of funds that are in the
possession of the Trust Department. Directors serving on this committee
are William C. Cloar, Larry W. Gibson, Barry T. Ladd, L. D. Pennington,
and Dwight Steven Williams, Trust Officers serving on this committee are
Hughes Clardy, Chairman and Sue Carolyn Akins. Twelve meetings were
held during the year.
The Investment Committee consists of seven members appointed by the
Board, and the Bank's Investment Officer. It is the responsibility of
this committee to set and monitor investment activity guidelines. Four
meetings were held during 1997. The Executive Committee serves as the
Investment Committee.
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The Community Reinvestment Act Committee was established within the
Community Reinvestment Act Program. It is the responsibility of this
Committee to develop, review, and implement ongoing CRA compliance
efforts. The CRA Committee consists of five directors, Ralph Henson,
Chairman, Eddie E. Anderson, John E. Heckethorn, Mary F. McCauley, Katie
Winchester, and a cross section of managers from various departments
within the bank. Two meetings were held throughout 1997.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Fees are established by the Board on an annual basis. Fees
for 1997 were set at $500.00 per meeting for each Director and advanced
on a per meeting attended basis. In 1997 an annual retainer fee of
$2,500.00 per director was paid for services on the Board of the
Corporation. Additional amounts are paid for service on various
committees as follows (annually): Executive/Investment Committee
$10,000.00, Audit Committee $3,600.00, Trust Committee $4,500.00 and CRA
Committee $2,000.00. Executive Officers who are also Directors receive
no additional compensation for service on a Board Committee.
The following table discloses individually Executive Officers of
the Holding Company and its subsidiaries who received direct annual
remuneration in excess of $100,000.00. As the Holding Company pays no
salaries, this information relates to all compensation paid by First
Citizens National Bank. The following tabulation is for the period
ending December 31, 1997.
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SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Re- All
Name Annual stricted Securities Other
and Compen- Stock Underlying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs (#) ($) ($)
Stallings 1997 161,168 55,475 16,000 -0- -0- -0- 10,639
Lipford(1) (2) (3) (4)
Chairman 1996 150,320 49,000 15,000 -0- -0- -0- 9,137
of Board of (2) (3) (4)
Directors 1995 142,027 33,278 15,000 -0- -0- -0- 9,137
of Banc- (2) (3) (4)
shares and
of the Bank.
Katie 1997 147,298 50,225 16,000 -0- -0- -0- 1,487
Winchester(1) (2) (3) (4)
CEO &
President 1996 129,830 42,000 15,000 -0- -0- -0- 1,487
& Director (2) (3) (4)
of First 1995 115,032 26,250 14,210 -0- -0- -0- 968
Citizens (2) (3) (4)
Bancshares
& First
Citizens
National Bank.
Hughes 1997 81,929 70,558 16,000 -0- -0- -0- 1,007
Clardy (3) (4)
Vice 1996 81,853 55,244 13,964 -0- -0- -0- 840
President (3) (4)
of First 1995 79,254 31,300 11,288 -0- -0- -0- 504
Citizens (3) (4)
Bancshares,
Inc. & Sr.
Vice
President &
Sr. Trust
Officer
First Citizens
National Bank
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SUMMARY COMPENSATION TABLE (Continued)
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Re- All
Name Annual stricted Securities Other
and Compen- Stock Underlying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs (#) ($) ($)
Ralph 1997 97,928 42,841 13,487 -0- -0- -0- 1,023
Henson (3) (4)
Executive 1996 93,520 14,950 10,781 -0- -0- -0- 951
Vice (3) (4)
President 1995 86,006 12,250 9,925 -0- -0- -0- 691
& Loan (3) (4)
Administrator
of First
Citizens
National
Bank & Vice
President
of First
Citizens
Bancshares Inc.
Barry T. 1997 101,186 34,475 13,967 -0- -0- -0- 1,125
Ladd(5) (2) (3) (4)
Executive 1996 77,506 24,500 10,833 -0- -0- -0- 450
Vice (2) (3) (4)
President 1995 60,557 6,000 6,598 -0- -0- -0- 225
and CAO of (2) (3) (4)
First
Citizens
National
Bank &
Executive
Vice
President
of Bancshares.
(1) Katie Winchester was named CEO & President of First Citizens
Bancshares Inc. on April 16, 1996. The position of CEO was
previously held by Chairman Lipford.
(2) Salaries reported includes Director Fees up to $8,500.00 paid to
each Executive for service on the Board of Directors.
(3) Contributions made by the Bank to Employee Stock Ownership Plan.
(4) Economic Benefit of Life Insurance Policy.
(5) Barry Ladd was named Executive Vice President and CAO of
Bancshares, and the Bank in April 1996.
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<PAGE>12
COMPENSATION PLANS
Incentive Compensation Plan
Executive Officers are eligible for annual cash bonuses. The
senior management incentive plan provides bonus compensation based on
corporate performance, business unit performance and individual
performance. The level of incentive compensation for Executive
Officers is based on Return on Assets with a minimum qualifying ROA
of 1%.
Employee Stock Ownership Plan
Effective December 31, 1984 the Board of Directors of the Bank
approved a resolution establishing the First Citizens National Bank
Employee Stock Ownership Plan and Trust, designed to invest primarily
in Holding Company Stock. Of the twenty-two Directors, four are also
Executive Officers of the Bank Holding Company and plan participants
receiving a distribution. Benefits accruing to the accounts of
individuals named in the Summary Compensation Table for the plan year
ending December 31, 1997 totaled $75,455. The distribution and
vesting of the amount allocated is not subject to future events.
Administration of the Plan is the responsibility of an admini-strative
committee as directed by the Board of First Citizens
National Bank. Any employee who has completed one (1) year of
service (1,000 hours) and who has reached the age of 21 shall be
eligible to participate. Distribution of benefits can be made in
stock, cash or a combination of both. Benefits are payable as a
single distribution or equal annual installments at normal retirement
date, coinciding with or following the participant's 65th birthday.
An amendment made in 1994 provided for the elimination of the
investment diversification option of the plan. This option in the
plan stated that for five years after attaining age 55 and completing
10 years of plan participation, ESOP participants would be given an
opportunity to either diversify 25% of their ESOP Account Investments
or receive distribution of 25% of the account. In the sixth year
this option applies to 50% of the account balance. With the
elimination of diversification option, plan participants will only
have the option of receiving a distribution that can be transferred
directly to an IRA or to an investment account selected and managed
by the participant.
Also included in the Plan are provisions for distribution of
benefits to the participant or designated beneficiary upon early
retirement, becoming totally and permanently disabled, or upon the
death of the participant. Allocations of stock to the account of
each participant will be based on the ratio of his/her compensation
to all participant's compensation for the plan year. Total
contributions to the plan for the year ending December 31, 1997 were
approximately $429,000.00.
Executive Employment Agreements
Executive Employment Agreements are currently in effect by and
between First Citizens National Bank (the "Bank"), First Citizens
Bancshares, Inc. (the "Company") and Stallings Lipford, Katie S.
Winchester, Barry T. Ladd, Ralph E. Henson, H. Hughes Clardy and
Jeffrey Agee. The Agreements provide for terms of employment and
compensation and benefits in the event of termination by "action of
the Company" or "change in control". A "change in control", as
defined in the Agreement, is deemed to occur if any person, firm or
<PAGE>13
corporation shall obtain "control" of the Company through the
acquisition, directly or indirectly, by any person or group of
persons of shares in the Bank or Bancshares, which, when added to any
other shares, the beneficial ownership of which is held by such
acquire(s), shall result in ownership by any person(s) of ten percent
(10%) of such stock or which would require prior notification under
any federal or state banking law or regulation; or the occurrence of
any merger, consolidation or reorganization of the Bank to which the
Bank or Bancshares is not a surviving entity, or the sale of all or
substantially all of the assets of the Bank or Bancshares.
In the event of the officer's termination caused by "action of
the Company" not for cause of a "change in control" or in the event
the officer's termination is caused by a "change in control", the
officer shall be entitled to receive severance pay within 30 days
following the date of termination, an amount equal to two times the
compensation paid in the preceding calendar year, or scheduled to be
paid to the Executive during the year of the notice of termination,
whichever is greater, plus an additional amount sufficient to pay
United States income tax on the lump sum amount so paid. Executive
officers terminated for failure to satisfactorily perform his/her
regular duties will receive no severance pay.
Executive Employment Agreement in effect for Chairman Lipford
also provides for terms and conditions for part-time employment.
During the term of employment, Chairman Lipford shall serve as
Chairman of the Company or in such other position with
responsibilities and authority as may from time to time be assigned
to him by the Board of Directors of the Company. During 1997 Chairman
Lipford devoted substantially all of his working time and efforts to
the business affairs of the Company. In the years of 1998 and 1999,
he will devote between 1,000 and 1,500 hours per year to the business
affairs of the Company. Beginning January 1, 2000, unless the Term
of Employment has not been extended, he will devote only such time to
the affairs of the Company as shall be appropriate in light of the
circumstances then existing. In addition, Chairman Lipford shall
serve on the Board of Directors of the Company during the Term of
Employment for so long as he is elected to such Board by the
Shareholders of the Company.
Executive Management Life Insurance Plans
Executive Management Life Insurance Plans were provided for in
Executive Employment Agreements adopted by the Company in April,
1993. A Collateral Assignment Split Dollar Life Insurance Plan was
provided for the President and four other Executive Officers of the
Company in which the Company agreed to pay individual life insurance
premiums not to exceed $12,500.00 per year. The Company's obligation
to pay this premium shall cease upon termination of the Executive's
employment. The Executive agreed to repay the Company the full
amount of premiums paid by the Company when employment is terminated.
Repayment of premiums under any circumstances cannot exceed the cash
value of the policy. Premiums paid annually for Collateral
Assignment Split Dollar Life Insurance for Executive Officers totaled
$12,500.00 for the President & CEO, and Executive Vice President &
CAO, and range between $5,000.00 and $10,000.00 for other Executive
Officers.
<PAGE>14
The Company has provided and paid premiums on a whole life
insurance policy on the life of the Chairman of the Board since
December, 1984. As an additional employee benefit, the Company has
agreed to continue to pay premiums not to exceed $10,000.00 per year
on the existing life insurance policy in the amount of $250,000.00.
Ownership of the whole life policy including current cash value was
transferred from the Company to the Chairman upon execution of the
Employment Agreement.
Proposed Charter Amendment
The Board of Directors on February 18, 1998, approved the
following amendment to the Charter of the Corporation and recommended
to the shareholders that they adopt such amendment:
A. Article 6 is amended to read as follows:
The maximum number of shares which the Corporation shall
have authority to issue is 10,000,000 shares of voting
common stock having $1.00 par value. The main purpose of
the amendment is to allow the Corporation to have more
flexibility in the future in issuing shares to acquire
other businesses or banks, providing shares for the
Corporation's dividend reinvestment plan, making shares
available to the Corporation's Employee Stock Ownership
Plan, and allowing the Board of Directors the option to
declare stock splits for all of the shareholders from
time to time. While none of the listed transactions have
been approved at the current time, the Board of Directors
would like to be able to take advantage of opportunities
as they arise, and it may not be feasible or timely to
call for a meeting of shareholders each time additional
shares are required for any of these purposes. As a
result of the authorization of additional shares, there
will be over nine million authorized but unissued shares
available for issuance and sale by the Board of
Directors.
B. Article 10 regarding the maximum number of directors is
Deleted:
The provision deleting Article 10 of the Charter, which
restricted the maximum number of directors of the
Corporation to 22 directors, is also deemed to provide
greater flexibility to the Board in adding additional
representatives from the various communities which the
Corporation serves. This will also allow the Board to
add additional members with specific expertise in lines
of business in which the Corporation may expand. The
current Board of Directors consists of 22 members, and
there is no present contemplation to increase this
number.
The Tennessee Business Corporation Act requires that the charter
amendment be authorized by the vote of a majority of those votes
entitled to be cast at the meeting, except for the deletion of
Article 10, which by its terms, requires the vote of 80% of the
outstanding voting stock. The Bylaws of the Corporation allow a
shareholder to be represented by proxy duly appointed by him in
writing.
<PAGE>15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the officers, directors, and principal shareholders of
the Holding Company (and their associates) have deposit accounts and
other transactions with First Citizens National Bank, including loans
in the ordinary course of business. An Associate includes a
corporation or other entity of which an officer or director of the
Company is an officer, partner, or 10% shareholder; any Trust or
Estate of which he is a Trustee, Executor or significant beneficiary;
or any relative or spouse or spouse's relative who lives in his home.
Banking transactions in the ordinary course of business with
directors, officers, principal stockholders, and their associates are
on the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with
others. Loans to directors, officers and principal shareholders, and
their associates, are made on the same terms and conditions afforded
other borrowers with similar credit standing who are not associated
with the Bank. These loans do not represent unfavorable features or
more than a normal risk of collectability. The largest aggregate
amount of debt outstanding both direct and indirect, during the
twelve month periods ending December 31, 1997 was $4,986,396 as of
December 31, 1997. The amount outstanding at year end 1997 was
$4,986,396 at an average rate of 8.05 percent. The debt was incurred
over a period of time and served to finance business ventures and
purchase real estate. As of December 31, 1996, $4,448,184 was loaned
at an average interest rate of 8.89 percent. On December 31, 1997,
the Holding Company, through its only subsidiary, First Citizens
National Bank had an aggregate net loan total of $226,488,000. Loans
to Executive Officers and Directors of the Holding Company comprised
2.20% of this total. No Director or Officer of First Citizens
National Bank or First Citizens Bancshares, Inc. is directly indebted
to the Holding Company. Changes in holdings of securities by insiders
were reported to the Securities and Exchange Commission on a timely
basis. Changes in beneficial ownership of securities must be filed
with the SEC on or before the 10th day after the end of the month in
which any change occurred.
<PAGE>
<PAGE>16
TOTAL SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph reflects First Citizens Bancshares' cumulative
return (including dividends) as compared to the S & P 500 and the
Nasdaq Banking Stocks over a 5-year period.
1992
1993
1994
1995
1996
1997
S & P 500
100.00
110.03
108.34
145.29
173.37
231.21
FIRST
CITIZENS
100.00
122.27
154.77
186.65
240.11
406.00
NASDAQ
BANK STOCK
100.00
129.37
130.79
189.40
239.40
391.64
<PAGE>
<PAGE>17
RELATIONSHIP WITH INDEPENDENT AUDITORS
The firm of Carmichael, Dunn, Creswell, and Sparks, CPAs served
First Citizens National Bank and First Citizens Bancshares, Inc. as
auditors for the year ending December 31, 1997. The Board is proposing
that this firm serve as auditors for the current year (1998). They have
no direct financial interest or material indirect financial interest in
the company. Audit services provided by the auditors for the year
ending December 31, 1997 consisted of (but not limited to) examination
of the financial statements of both the Bank and Holding Company and
reporting on such statements. A representative of Carmichael, Dunn,
Creswell, and Sparks, CPAs will be in attendance at the Annual
Shareholders Meeting to answer questions and offer comments regarding
their audit.
PROPOSALS BY SECURITY HOLDERS
Shareholder proposals intended to be presented in the Proxy
materials to be mailed in 1999 other than nominees to be proposed for
election to the Board of Directors must be submitted by certified or
registered mail to Judy Long, Secretary, First Citizens Bancshares,
Inc., P.O. Box 370, Dyersburg, TN 38025-0370, no later than December 1,
1998. Nominees to be proposed for election to the Board of Directors of
the Corporation, other than nominations made by the existing Board of
Directors, must be delivered in writing to the Secretary of the
Corporation and received no later than ninety (90) days prior to the
month and day that the proxy materials regarding the last election of
Directors to the Board of the Corporation were mailed to Shareholders.
OTHER BUSINESS
The Board of Directors knows of no other business other than that
set forth herein to be transacted at the meeting; but, if other matters
requiring a vote of shareholders arise, the persons designated as
proxies will vote their judgement on such matters. If a shareholder
specifies a different choice on the Proxy, his/her shares of Common
Stock will be voted in accordance with the specifications so made.
A copy of the Company's Annual Report to Shareholders for the year
ended December 31, 1997, accompanies this report. A copy of the 10-K
report to the Securities and Exchange Commission for the year ended
December 31, 1997 will be furnished any shareholder requesting such copy
free of cost. Requests should be in writing to Judy Long, Secretary,
First Citizens Bancshares, Inc., P.O. Box 370, Dyersburg, TN 38025-0370.
BY ORDER OF THE BOARD OF DIRECTORS
Judy Long
Secretary
Dyersburg, TN
March 17, 1998
<PAGE>
<PAGE>18
FIRST CITIZENS BANCSHARES, INC.
First Citizens Place
Dyersburg, Tennessee 38024
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of First Citizens Bancshares, Inc.,
hereby appoints P. H. White, Jr., and William C. Cloar, and each of them
severally, proxies of the undersigned, with full power of substitution,
to vote the shares of Capital Stock of First Citizens Bancshares, Inc.
standing in the name of the undersigned on February 28, 1998, at the
Annual Meeting of Shareholders to be held in the Annex of First Citizens
National Bank, on Wednesday, April 15, 1998, at 10:00 A.M., and at all
adjournments thereof:
(1) Election of Directors
For all nominees listed below Withhold Authority to
vote for all nominees
listed below
INSTRUCTIONS: YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE
LISTED BELOW BY LINING THROUGH OR STRIKING OUT SUCH
INDIVIDUAL'S NAME
INCUMBENT NOMINEES FOR ELECTION WHOSE TERMS WILL EXPIRE IN 2001
William C. Cloar, James Daniel Carpenter, Richard W. Donner,
Bentley F. Edwards, Ralph E. Henson, Stallings Lipford, Larry S.
White.
INCUMBENT NOMINEE FOR ELECTION WHOSE TERMS WILL EXPIRE IN 2000
Barry T. Ladd
INCUMBENT NOMINEE FOR ELECTION WHOSE TERMS WILL EXPIRE IN 1999
David R. Taylor
(2) Approval of Carmichael, Dunn, Creswell, and Sparks, CPAs as
auditor for the year ending December 31, 1998
FOR AGAINST ABSTAIN
(3) Approval of amendment to the Company's Charter to increase the
authorized shares of common stock to 10,000,000 shares.
FOR AGAINST ABSTAIN
(4) Approval of deletion of Article 10 of the company's charter
regarding the maximum number of directors.(The affirmative
vote of the holders of not less than 80% of outstanding stock
is required.)
FOR AGAINST ABSTAIN
(5) To transact other business as may properly come before the
meeting or any adjournments thereof
FOR AGAINST ABSTAIN
<PAGE>
<PAGE>19
This proxy confers authority to vote "For" the propositions listed
unless "Against" or "Abstain" is indicated. If no direction is given,
this proxy will be voted "for" the election of all nominees named; "for"
approval of Carmichael, Dunn, Creswell, and Sparks, CPAs as auditors for
the current year; "for" the proposed amendments to the Charter of First
Citizens Bancshares, Inc., and "for" the deletion of Article 10 of the
company's charter regarding the maximun number of directors.
Please sign exactly as name appears below.
When shares are held by joint tenants both should sign. When signing as
attorney, executor, administrator, trustee, or guardian, please sign
full title. If more than one trustee, all should sign.
Dated March 17, 1998
Signature
Signature if jointly held
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
<PAGE>20
SIGNATURES
I certify that the statements made in this statement are true,
complete, and correct to the best of my knowledge and belief.
First Citizens Bancshares, Inc.
(Registrant)
Date: March 17, 1998 /s/Stallings Lipford
Stallings Lipford, Chairman
