Home Locations Customer Support

Comments From Corporate

To Our Shareholders:

First Citizens Bancshares, Inc. is pleased to report continued strength and stability in its financial position and operating results for the quarter ended March 31, 2014.  The Company produced value for our shareholders as reflected in our return on equity of 13.34% for first quarter 2014 compared to 12.59% in first quarter 2013.  Dividend yield for first quarter 2014 remains steady at 3.3% compared to 3.3% for each of the years ended December 31, 2013 and 2012.  Total shareholder return was 16.15% as of March 2014 compared to 11.67% in March 2013.  Seifried & Brew, a well known banking economic and consulting group recently announced that First Citizens National Bank was included in the 2013 Top 15th percentile of Community Banks for the third year in a row.  The benchmark for this ranking includes institutions with assets between $100 million and $5 billion and the review was based off a total risk/return composite rating.  The Company was also recently recognized by American Banker Magazine as #53 in the Top 200 Community Banks in the U.S. based on three-year average return on equity for commercial banks and thrifts with total assets of $2 billion or less.


Results of Operations

Net income totaled $3.8 million for first quarter 2014 which is an increase of 6.6% compared to first quarter 2013. Earnings per share for first quarter 2014 totaled $1.06 per share compared to $0.99 per share in first quarter of 2013. Increased earnings in 2014 were attributable to modest increase in net interest income after a provision decrease of 8.16% and a 16.92% increase in non-interest income. Net interest income to average assets was steady at 3.23% for first quarters 2013 and 2014. Non-interest income increased primarily due to an increase in realized gains on sale of investment securities of approximately $974,000 and is primarily attributable to gains totaling approximately $700,000 recognized from the sale of Fannie Mae and Freddie Mac perpetual preferred stock.  


The Company recorded $225,000 in provision expense in first quarter 2014 compared to $245,000 during first quarter 2013.  Net loans charged-off in first quarter 2014 totaled approximately $172,000.  Non-interest expense increased 5.0% as a result of expenses associated primarily with salaries and benefits, information technology, and expenses associated with expansion strategies.  Increased expenses are consistent with increased income streams and with core strategies regarding growth and market expansion, customer service, data integrity, brand awareness, and teammate retention.


Financial Position

The Company remains steadfast in its commitment to quality growth balanced by both strong liquidity and capital positions.  Deposits totaled $986 million as March 31, 2014 compared to $957 million as of March 31, 2013.  Other borrowings, consisting primarily of advances from the Federal Home Loan Bank (“FHLB”), decreased to $94 million as of March 31, 2014 compared to $99 million as of March 31, 2013.  Capital increased $1.9 million or 1.6% from March 31, 2013 to March 31, 2014, the result of undistributed net income of $9.4 million and a decrease of $7.5 million in accumulated other comprehensive income.  Decreased accumulated other comprehensive income is due to reduction in unrealized gains on the investment portfolio.  Unrealized gains on investments retreated significantly in second half of 2013 and first quarter 2014 relative to the rise in 10-year Treasury yields in recent months.  Total assets were $1.20 billion as of March 31, 2014 compared to $1.18 billion in March 2013.  Asset growth is primarily due to 5.29% growth in loans from March 2013 to March 2014. 


Our Future

The economic environment continues to be filled with challenges and concerns. In addition, regulatory pounding from Washington, D.C. continues to surface and negatively impact our banking industry. Just to name a few are Dodd-Frank demands, Basel capital reform and material mortgage lending rule changes. Our banking system has now weathered another Recession and emerged with better risk controls, capital and efficiency. While the economy slowly recovers, our agriculture sector continues to be robust. First Citizens has been a partner with farmers since 1889 and anticipates this partnership to add much value going forward.


First Citizens recently announced execution of a definitive Agreement and Plan of Merger whereby Southern Heritage will partner with First Citizens through a cash and stock merger. Following the completion of the transaction, Southern Heritage will retain its name and will remain a separately chartered bank, operating as a subsidiary of First Citizens Bancshares, Inc.  With the merger, First Citizens will extend its branch footprint statewide while solidifying its position as the 7th largest Tennessee based community bank. In addition, First Citizens will increase its statewide market share, improving its Tennessee deposit market share ranking to 16th. The combined organization will have approximately $1.5 billion in assets, $1.2 billion in deposits, 350 associates and 24 branches across 10 Tennessee counties.


Construction of the de novo branch office to be located at 1285 Union University Drive in Jackson, Tennessee which was announced in first quarter 2013 is well under way and is expected to be open by October 2014.  The U.S. economy continues to grow slowly but we remain optimistic about First Citizens’ future.


Our roots go back to 1889 and we are proudly celebrating our 125th anniversary this year. We thank our shareholders for your support and will strive to build a fortress franchise supported by a committed team, customer base, shareholders and risk management culture.