Serving the needs of customers since 1889

Serving the needs of
customers since 1889
2008 ANNUAL REPORT
FIRST CITIZENS NATIONAL BANK …
A Proud Tradition of Service
“The year was 1889 and Dyersburg, Tennessee had established itself as the center of a major growth area. The Civil War had
ended, leaving behind a much improved road system created to provide supplies to the Confederacy. Two major railroads
served the area, the Memphis, Paducah and Northern Line and the Newport News and Mississippi Valley Railroad.
The Dyersburg Academy had recently opened with an average daily attendance of 195 students. Selling fresh meat on the
town square would net you a $10.00 fine and hanging onto trains for a ride through the city was strictly prohibited. Fiddling,
dancing and card playing were not allowed in local saloons and all hogs had to be confined to pens.” *
In support of this environment of growth and prosperity, community leaders recognized the need for local banking services.
Twenty-five forward thinking individuals invested $5,000 each in a total of 100 shares of capital stock, applied for a charter, and
in 1889 the Citizens Bank was established. It was in this same year the First National Bank of Dyersburg was organized. The
two banks merged in 1923 and became First Citizens National Bank. Subsequent to the merger, construction began on the
building that even today houses the Corporate Headquarters and main offices of First Citizens Bancshares, Inc.
In 1983, shareholders of First Citizens National Bank approved the formation of First Citizens Bancshares, Inc., a bank holding
company. A consolidation plan was simultaneously approved that resulted in the Bank becoming a wholly owned subsidiary
of First Citizens Bancshares, Inc.
Over the past one hundred twenty years, First Citizens National Bank has remained a strong, stable, independent community
bank with a focus on shareholder return and quality customer service. While the convenience of branch banking and automated teller machines had a major impact on growth and progress over the years, the revolution in innovative products and
service delivery made possible by enhanced technology leveled the competitive playing field and supported expansion of the
First Citizens’ franchise to other markets. Today, First Citizens’ customers are served by 20 convenient locations throughout
West and Middle Tennessee. Continued expansion at the appropriate time remains a vital part of the bank’s strategic goals.
While current economic conditions forced management to rethink certain strategies, overall goals and objectives of this Company have not changed. Enhanced shareholder return, convenient delivery of quality products and services to customers and
conservative expansion of markets remain priorities of the Board, management and staff of First Citizens.
* Taken from the 1988 Annual Report to Shareholders, First Citizens Bancshares, Inc.
5
FINANCIAL HIGHLIGHTS
TOTAL ASSETS
NET LOANS
TOTAL DEPOSITS
$928
$589
$735
(Dollars In Millions)
(Dollars In Millions)
(Dollars In Millions)
$578
$876
$690
$543
$540
$831
$816
$666
$636
$528
$773
$592
‘04
‘05
‘06
‘07
‘08
‘04
EARNINGS PER SHARE
‘05
‘05
‘06
‘06
‘06
‘07
‘08
‘04
RETURN ON EQUITY
$2.20 $2.38 $2.52 $2.53 $2.08
‘04
‘04
‘05
‘04
‘05
‘06
‘06
‘07
‘08
NET INTEREST MARGIN
13.56% 13.71% 13.88% 12.79% 10.07%
‘07 ‘08
‘08
‘07
‘05
‘07
‘08
3.60%
3.77%
‘04
‘05
3.75%
3.78%
‘06
‘07
3.84%
‘08
FIVE YEAR FINANCIAL SUMMARY
(In thousands, except per share data)
DECEMBER 31
Selected Year End Balances
Total assets
Total loans (net)
Total deposits
Total shareholders’ equity
2008
2007
2006
2005
2004
$927,502
589,458
734,915
77,008
$876,156
578,311
690,595
75,031
$831,420
542,623
666,063
69,498
$815,749
540,387
635,509
65,740
$773,204
528,443
592,382
62,835
For the Year
Net income
Return on average assets
Return on average equity
$7,529
.86%
10.07%
$9,160
1.08%
12.79%
$9,157
1.10%
13.88%
$8,665
1.10%
13.71%
$8,049
1.08%
13.56%
Per Share Data
Net income
Dividends
Book value
Average number of shares outstanding
$2.08
$1.16
$21.24
3,625
$2.53
$1.16
$20.70
3,626
$2.52
$1.16
$19.13
3,633
$2.38
$1.12
$18.09
3,639
$2.20
$1.12
$17.22
3,652
1.
To Our Shareholders,
We are pleased to report that
for the year ended December 31,
2008, core earnings of First Citizens
Bancshares were stable, resulting
in a return on equity in excess of
10%. Dividends paid to Shareholders
remained at a level consistent with
the prior year payout of $1.16 per
share. The reduction in year over
year earnings can be attributed to
two primary sources. The first being
loan losses, approximately one-half
of which were incurred as a result of
stressed real estate conditions and
the corresponding increase to the
provision for loan losses. The second,
a $1.81 million impairment charge
covering losses in Fannie Mae and
The lobby of First Citizens National Bank, Dyersburg,
Tennessee on “Grand Opening” day in 1924
Hundreds from the surrounding community attended the grand opening in 1924 of what was
described by a local newspaper as “Dyersburg’s first skyscraper.” This six-story facility adequately
accommodated the space needs of First Citizens National Bank until 1987, at which time an
addition doubled the size of the original building that now serves as corporate headquarters and
the main office of First Citizens National Bank..
First Citizens National Bank.
Freddie Mac perpetual preferred stock held as an asset in First
Providing Financial solutions ...
Citizens’ Investment Portfolio. In spite of both challenges First
Citizens Bancshares ended 2008 with earnings of $7.5 million
compared to $9.2 million in 2007. Per share earnings on Bancshares’ common stock were $2.08 for the year ended December 31, 2008 compared to $2.53 per share in 2007.
Achieving positive results in the current economy is not easy,
but there are areas of improvement. Although total non-interest income for 2008 decreased $1.2 million due to net realized
losses on available-for-sale securities, trends of strong non-interest income streams continued. In spite of challenges posed
by real estate markets during 2008, the number of long-term
mortgage originations by First Citizens remained high, producing
$1.1 million in gross revenue in 2008. This is down only slightly
from the $1.2 million reported for the year ending December
31, 2007. Fee income from deposit accounts which includes interchange fees on debit and ATM transactions increased to $7.2
million in 2008, up from $6.9 million in 2007. Income generated
by the First Citizens/White and Associates Insurance Company,
LLC increased by $139 thousand in 2008 compared to 2007.
2.
Asset growth of 5.9% remains consistent with the level experienced in four of the past five years. Lower capital growth is primarily
a result of the cumulative effect of a change in accounting principle for adoption in 2008 of EITF 06-04 of $1.9 million and lower net
income in 2008 as noted above. Decreased earnings combined with modest capital growth lowered 2008 return on average equity
to 10.07% compared to 12.79% in 2007.
Return on assets of 0.86% in 2008 compares
to 1.08% for 2007. The return on equity
(ROE) of 10.07% and return on assets (ROA)
Developing a plan
to fund the
education of
your children ...
of 0.86% in 2008 exceeds the Southeast Bank
Group Index as produced by Mercer Capital
which reported an average ROE of 1.75% and
average ROA of 0.21% for 2008.
Maintaining and improving net interest margins continue to be top priority. First Citizens’ net interest margin has been stable over
the past five years in the range of 3.7% to
3.9% despite volatility in federal funds rates
during that timeframe. Net interest margin
for 2008 improved slightly to 3.84% from
3.78% in 2007. Current economic, competitive and market rate factors are expected to
continue to exert pressure on margins going
forward. Interest rate risk for the Company
is maintained at a fairly neutral level, and is
a contributing factor to the stability of net
interest margins.
Total Capital, excluding Reserve for Loan
Funding the every
day needs of a
growing family ...
Losses, as a percentage of total assets at yearend 2008 was 8.30%. This compares with
8.56% and 8.36% at December 31, 2007 and
2006 respectively. Bancshares has historically maintained capital in excess of minimum
levels established by regulation and reflects
continuous improvement when comparing
to prior years. The risk based capital ratio of
12.75% at December 31, 2008 was significantly in excess of the 10% mandated by regulation in order to be classified a well capitalized bank. This ratio has been maintained
at levels in excess of 12% over the past three years. We strategically manage capital at these levels incorporating risk with return.
Future reports may possibly reflect significant increases in capital levels by competing banks opting to participate in the government
stimulus program. However, the board and management of First Citizens determined that participation in the government stimulus
program is neither necessary nor in the best interest of Shareholders.
3.
As of year-end 2008, there are approximately
$10 million of retained earnings available for
payment of future dividends from the Bank
to Bancshares. Banking regulations require
certain capital levels to be maintained and may
limit dividends paid by the Bank to Bancshares
or by Bancshares to its shareholders. These
restrictions pose no practical limit on the ability of the Bank or Bancshares to pay dividends
at historic levels.
First Citizens National Bank Ag Division was
recognized as being #92 of the top 150 Agriculture Lenders in the U.S. in 2008. Agricultural credits totaling $65 million make up 11%
of First Citizens lending portfolio. Located
in the heart of six West Tennessee Counties
considered to be major producers of cot-
Investing services for
a secure retirement ...
ton, corn, wheat and soybeans, First Citizens
National Bank remains the only Community
Bank in West Tennessee to hold the designation of Preferred Lender by the Federal Farm
Services Agency. This designation streamlines
the FSA Guaranteed Loan approval process, allowing our lenders to more efficiently serve
the needs of local farmers.
4.
In recognition of ongoing support of Dyersburg State Community College, the Tennessee Board of Regents presented the Regents
Award for Excellence in Philanthropy to First Citizens National Bank and its Board of Directors. In June of 1993, First Citizens
provided the leadership gift in support of the college’s Endowment Fund with a pledge of $250 thousand from the bank and an equal
amount from the bank’s Directors, payable over ten years. Payments to date toward the $500 thousand pledge total $562 thousand.
Additional donations and services provided the College by First Citizens staff, officers and directors include:
• Seven First Citizens officers and directors currently serve on the
Dyersburg State Community College Foundation Board
• Since 1985, ten First Citizens officers and directors served as
Chair of Annual Fund Drives in which $5.7 million has been
raised for the benefit of Dyersburg State
• President & CEO Jeff Agee spearheaded a campaign to
create a scholarship program in which the County Mayor
and Dyer County Government partnered with
the Dyersburg Mayor and Board of Aldermen to create
and award annual scholarships in the amount of $675.00
to Dyersburg and Dyer County High School Graduates
toward post-secondary expenses at DSCC or the
Tennessee Technology Center at Newbern
• Since 1985 First Citizens National Bank has fully
funded six annual scholarships for students attending
Dyersburg State Community College. Each year two
of these scholarships are allocated to Upward
Bound Students.
First Citizens National Bank was ranked #159 in the top
200 community banks in the nation, according to a list
Working with customers
to identify and fulfill
their financial needs ...
5.
published by the U.S. Banker magazine in its June 2008
edition. The ranking is based on a three-year average
return on equity. The U.S. Banker list was pulled from
Securities and Exchange Commission reports for banks
with assets under $2 billion. First Citizens was the only
bank in Tennessee to be listed
in the rankings.
Results of operations
of First Citizens Bancshares
Helping your
business
grow ...
for 2008 are certainly not as
positive as we would like them to be. On the other hand,
a comparison with results accomplished by a majority of
peer banks to which we are compared reflects well on our
efforts. We are hopeful that over the next few months, the
economic storm will calm and circumstances will return
to more normal conditions. In the interim, you may be
assured that this company will continue to operate in a conservative manner with a strategic focus on providing quality customer
service and producing shareholder value.
Jeffrey D. Agee, President & CEO
6.
Katie Winchester, Chairman
DIRECTORS AND OFFICERS
First Citizens Bancshares, Inc.
Jeffrey D. Agee
President & CEO
First Citizens Bancshares, Inc.
First Citizens National Bank
Dyersburg, TN
Eddie E. Anderson
Anderson Farms II
Dyersburg, TN
J. Walter Bradshaw
Vice President & Director
Bradshaw & Co. Insurors
Dyersburg, TN
J. Daniel Carpenter
Flatt Heating and Air Conditioning
Newbern, TN
William C. Cloar
Retired
Dyersburg, TN
John M. Lannom
Attorney at Law
Dyersburg, TN
T. Stallings Lipford
Chairman Emeritus
First Citizens Bancshares, Inc.
First Citizens National Bank
Dyersburg, TN 38024
Milton E. Magee
Retired - Chic Farm Co.
Partner – Magee & Taylor, FLP
Partner – J & M, FLP
Dyersburg, TN
Allen G. Searcy
Allen Searcy Builder-Contractor, Inc.
Pres. – Crestwood Development Corp.
VP of Building Solutions, Inc.
Union City, TN
Richard W. Donner
President – Trenton Mills
Trenton, TN
Green W. Smitheal
Partner, Smitheal Farm &
Biesel/Smitheal Cattle Co.
Dyersburg, TN
Bentley F. Edwards
EVP & Director of Burks Enterprises, Inc.
COO of Burks Beverages, LP
David R. Taylor
CEO Forcum- Lannom Contractors, LLC
Dyersburg, TN
Larry W. Gibson
Pres. Roberts-Gibson, Inc.
Dyersburg, TN
Larry S. White
Pres. – White & Assoc. Insurance Agency, Inc.
Partner – First Citizens/ White & Associates
Insurance Company, LLC
Dyersburg, TN
Christian Heckler
Regional Pres. Of Southwest Region
First Citizens National Bank
Ralph E. Henson
EVP of First Citizens Bancshares, Inc. & First
Citizens National Bank
Dyersburg, TN
Barry Thomas Ladd
Retired
Newbern, TN
P. H. White, Jr.
PH White Farms
Dyersburg, TN
Dwight Steven Williams
President
Johnson-Williams Funeral Home
Newbern, TN
Joseph S.Yates
President
General Appliance & Furniture Company
Dyersburg, TN
Holding Company directors also serve on
FCNB Board of Directors
First Citizens National Bank
Officers
Katie Winchester
Chairman of the Board
Jeffrey D. Agee
President & CEO
Judy D. Long
COO & Board Secretary
Laura Beth Butler
CFO
Sherrell Armstrong
CCO
Ben Ragan
Regional President
Dyer & Lauderdale County
Chris Heckler
Regional President
Tipton, Fayette and Shelby County
Jody Kizer
Regional President
Obion County
Charles A. Graves
Regional President
Williamson County
David Hopkins
Regional President
Madison County
Katie S. Winchester
Chairman – First Citizens Bancshares, Inc.
First Citizens National Bank
Dyersburg, TN
7.
ADVISORY BOARD MEMBERS - 2008
South Tipton County
Corporate Advisory Board
Jeffrey D. Agee
Van Biggs
Gary Blume
Harry Haddad
Chris Heckler
Mitchell Higdon
William McGowan
C. Barham Ward
Robert W. Wilson
Katie Winchester
Terry Leggett
Mike McGinnis
Parker Fullen
Charlene Roberts
Mike Douglas
Dale Bryant
Barry Keathley
Tim Blackley
Jimmy Jones
Earl Bell
Jimmie Hart
Jeff Allen
Steve Conley
Mike Hannah
Dr. Robert Parrish, Jr.
Glen Bascom, Sr.
Brad King
Terry Allen Roland
John Haley
Randy Nicholson
Robert Nunnally Brandon Barker
Roger Kelly Ervin C. Robinson
Maurice Gaines
Milton Magee, Jr.
Tom Talley
Glen Baker
Rick Keith
John P. Roberts
Rosemarie Fair
Russ McCallen
Jimmy D. Tabb
Bobby Winstead
Gregg Leggett
Bill Stimpson
Ray Sneed
Dr. Bobby Hanks
Terri Colin
Susan Collins
Ed Todd
Tom Payne
T.H. Farmer
Advisory Board of Directors
First Citizens National Bank
Fayette County
Tommie J. Johnson, Jr.
Lauderdale County
Frank Currie
Burnie Norman
Obion County
Russell Abernathy, II
Robert S. Carpenter
Bryan Keathley
Shelby County
Dr. James Adams
Melissa M. Hayes
Chris Price
Gary Blume
Jim Liles
Charles Salvaggio
Don Hannah
Tipton County
Walter Butler
Brett Pickard
Weakley County
John Bucy
Danny Nanny
8.
CORPORATE INFORMATION
ANNUAL
MEETING
Corporate Headquarters:
First Citizens Bancshares, Inc.
One First Citizens Place
Dyersburg, TN 38025
Investor Relations:
Web Site: www.firstcitizens-bank.com
The Annual Meeting of Shareholders
will be held Wednesday, April 15, 2009
at 10:00 a.m. at
First Citizens National Bank
Lipford Room
One First Citizens Place
Dyersburg, TN 38025
731-285-4410
Stock Exchange Listing:
The common stock of First Citizens Bancshares, Inc. is not listed on any
exchange. Persons interested in Form 10-K
purchasing or selling shares of common A copy of the Company’s Annual Report
stock of the Company may contact
on Form 10-K, except for exhibits thereto,
Brenda Enoch, First Citizens National
is included herewith.
Bank, P. O. Box 370, Dyersburg, TN
38025-0370 or call her at 731-287-
4258 for information regarding availability of shares.
Transfer Agent:
Shareholders who have questions about
their accounts or who wish to change
the ownership or address of stock, to
report lost, stolen or destroyed certificates;
or to consolidate accounts should contact
Computershare, Shareholder Services,
1-800-942-5909
Come visit us online at
www.firstcitizens-bank.com