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First Citizens Bancshares, Inc.
(Exact name of registrant as specified in its charter)

P.O. Box 370, One First Citizens Place
Dyersburg, Tennessee 38024
(Address of principal executive offices including zip code)

FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET 
(Stated in Thousands)

See accompanying notes to consolidated financial statements.
- -1-

FIRST CITIZENS BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(STATED IN THOUSANDS)

FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(STATED IN THOUSANDS EXCEPT E.P.S. AND SHARES OUTSTANDING)

	Three Months Ended March
	2004		2003		2002
Interest Income	(In thousands except per share data)
Interest and fees on loans	$    8,063		$    8,518		$    7,452
Interest on investment securities:
Taxable	940		984		1,082
Tax-exempt	324		408		138
Dividends	62		64		61
Other interest income - Fed funds sold	27		62		65
Other interest income - checking	--		2		3
Lease financing income	--		--		--
Total Interest Income	9,416		10,038		8,801
Interest Expense
Interest on deposits	2,068		2,609		2,408
Other interest expense	1,083		1,125		924
Total Interest Expense	3,151		3,734		3,332
Net interest income	6,265		6,304		5,469
Provision for loan losses	300		280		353
Net interest income after provision	5,965		6,024		5,116
Other Income
Income from fiduciary activities	189		152		157
Service charges on deposit accounts	1,222		1,119		696
Brokerage fees	308		168		311
Securities gains (losses)	206		--		99
Other income	522		648		437
Total Other Income	2,447		2,087		1,700
Other Expenses
Salaries and employee benefits	3,305		3,031		2,404
Net occupancy expense	395		395		250
Depreciation	374		344		307
Data processing expense	165		216		183
Legal and professional fees	25		(7)		41
Stationary and office supplies	79		72		51
Amortization of intangibles	--		22		2
Executive payouts	--		--		--
Other expenses	1,272		1,315		1,062
Total Other Expenses	5,615		5,388		4,300
Net income before income taxes	$  2,797		$  2,723		$  2,516
Taxes	830		747		749
Net income	$   1,967		$   1,976		$   1,767
	=====		=====		=====
Earnings Per Share:	$ 0.54		$ 0.54		$ 0.48
	=====		=====		=====
Weighted average number of shares outstanding	3,653,595		3,657,590		3,672,782
	=======		======		======

See accompanying notes to consolidated financial statements.

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FIRST CITIZENS BANCSHARES, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED, STATED IN THOUSANDS)

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FIRST CITIZENS BANCSHARES, INC.,
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, STATED IN THOUSANDS)
MARCH 31, 2004

The consolidated balance sheet as of March 31, 2004, the consolidated statements of income for the three month periods ended March 31, 2004, 2003 and 2002, and the consolidated statements of cash flows for the three months periods then ended have been prepared by the company without an audit.  The accompanying reviewed 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, 2004 and for all periods presented have been made. Operating results for the reporting periods presented are not necessarily indicative of results that may be expected for the year ended December 31, 2004.  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, 2003.

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 - CONTINGENT LIABILITIES

There is no material pending litigation as of the current reportable date that would result in a liability.

NOTE 4 - RESERVE FOR LOAN LOSSES

FASB 114 and 118 were implemented during first quarter of 1995. This new FASB requires companies to set aside reserves for impaired loans.

The following data reflects impaired and probable loss loan totals:

Interest income recognized on impaired loans has been applied on a cash basis. Cash receipts are applied as cost recovery first or principal recovery first, consistent with OCC regulations. Management is confident the overall reserves are adequate to cover possible losses within the portfolio in addition to impaired loans.

NOTE 5 - DERIVATIVES ORIGINATION DATE: 06/2000

FASB 133, 137 and 138 - FASB 133 establishes accounting and reporting standards for derivative instruments, embedded in other contracts, and for hedging activities.  It requires derivatives to be reported as either assets or liabilities in the statement of financial position and measures those instruments at fair value.  The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.  FASB 137 and 138 amended FASB 133.  Bancshares' used the derivative as a cash flow to hedge the "Benchmark Interest Rate."  First Citizens designated a Federal Home Loan Bank Variable Libor Borrowing to be hedged and effectively locked in a fixed cost on the liability.  

First Citizens swapped a fixed investment cash flow for a variable cash flow that is tied to the 90 day Libor Rate.  The new variable investment cash flow is matched with a variable borrowing cash flow generating a positive spread of 250 basis points with no interest rate risk.  The transaction was implemented to increase earnings of First Citizens. Volume used in the transaction was $1.5 million. Volume and risk associated with the transaction is well within the Funds Management Policy of the bank.  Maturity of the hedge is 10 years.

The cash flow hedge has produced negative income because First Citizens swapped a fixed cash flow for a variable cash flow and rates later decreased. Value of the derivative increased $3 thousand net of tax for the current reportable period.  Other comprehensive income reflects fair market value of the derivative at $520 thousand gross and  $312 thousand net of tax.

NOTE 6 - FASB 142

This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supercedes APB 17.  Goodwill is no longer amortized.  This statement adopts a more aggregate view for goodwill and bases the accounting on the units of the combined units of the combined entity into which an acquired entity is integrated (those units are referred to as reporting units in FASB 131).  Currently First citizens' has one reporting unit and does not meet the tests to segment per FASB 131.  As of January 2002, First Citizens ceased to amortize goodwill ($25 thousand per month).  Tests implemented first quarter 2003 and 2004 to establish a goodwill benchmark resulted in an impairment of zero. Total goodwill as of the reportable date is $12 million or 1.63% of total assets or 20.33% of total capital. 

Amortization expense of the other identifiable intangibles for the quarter was $21 thousand for 2004 and $22 thousand for 2003.

NOTE 7 - LONG TERM OBLIGATIONS

In March 2002, the Company formed a wholly owned subsidiary First Citizens(TN) Statutory Trust II.  The Trust was created under the Business Act of Delaware for the sole purpose of issuing and selling preferred securities and using proceeds from the sale to acquire long term subordinated debentures issued by Bancshares.  The debentures are the sole assets of the Trust.  First Citizens Bancshares owns 100% of the common stock of the Trust.

On March 26, 2002 the Company through its wholly owned subsidiary, First Citizens (TN) Statutory Trust II, sold 5,000 of its floating rate Preferred Trust Securities at a liquidation amount of $1000 per security for an aggregate amount of $5,000,000.  For the period beginning on (and including) the date of original issuance and ending on (but excluding) June 26, 2002 the rate per annum of 5.59%.  For each successive period beginning on (and including) June 26, 2002, and each succeeding interest payment date at a rate per annum equal to the 3-month LIBOR plus 3.60%; provided however, that prior to March 26, 2007, this interest rate shall not exceed 11%.  Interest payment dates are: March 26, June 26, September 26, and December 26 during the 30-year term.

Bancshares' obligation under the debentures and related documents, constitute a full and unconditional guarantee by the Company of the Trust issuer's obligations under the Preferred Securities.  Although the debentures are treated as debt of the Company, they are treated as Tier I capital subject to a limitation that the securities included as Tier I capital not exceed 25% of the total Tier I capital.  The securities are callable by the Company after 5 years.  These funds are a partial source for the acquisition of Munford Union Bank, along with a line of credit and capital infusion from First Citizens National Bank.

The ability of First Citizens to service its long-term debt obligation is dependent upon the future profitability of its banking subsidiaries and their ability to pay dividends to the Company.

NOTE 8 - REVOLVING LINE OF CREDIT

First Citizens Bancshares has an approved two year renewable line of credit with First Tennessee Bank in the amount of $13 million. As of the reportable date, the drawn amount was $8.9 million.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 AND RESULTS OF OPERATIONS

GENERAL INFORMATION

First Citizens Bancshares, Inc. (the "company") headquartered in Dyersburg, Tennessee, the bank holding company for First Citizens National Bank ("the Bank"), First Citizens Capital Assets and First Citizens (TN) Statutory Trust II.  First Citizens National Bank is a diversified financial service institution, which provides banking and other financial services to its customers. The bank operates two wholly owned subsidiaries: Financial Plus, Inc. and Nevada Investments II. The bank also owns 50% of White and Associates/First Citizens Insurance LLC and First Citizens/White and Associates Insurance Company, Inc. These subsidiary activities consist of: brokerage, investments, insurance related products and credit insurance.

Land has been acquired in Oakland, Tennessee for the location of a new branch facility. A temporary banking facility will be opened for operations in mid-year, 2004.  Construction of a permanent banking facility on this site will begin within eighteen months.  Market data analysis for Fayette County reflects more than adequate market share growth available to support the bank's long-term financial projections.   Future population and household income growth within the area are projected to be positive.  First Citizens will continue to search for expansion opportunities that will result in a positive deployment of Bancshares' capital.

Quarterly reports on Form 10-Q, including all documents incorporated by reference, may contain forward-looking statements. Additional written or oral forward-looking statements may be made from time to time in other filings with the Securities Exchange Commission. The discussion of changes in operations may contain words that indicate the company's future plans, goals, and estimates of assets, liabilities or income. Forward-looking statements will express the company's position as of the date the statement is made. These statements are primarily based upon estimates and assumptions that are inherently subject to significant banking, economic, and competitive uncertainties, many of which are beyond management's control. When used in this discussion, the words "anticipate," "project," "expect," "believe," "should," "intend," "is likely," "going forward," and other expressions are intended to identify forward-looking statements. The statements are within the meaning and intent of section 27A of the Securitie s Exchange Act of 1934. Such statements may include, but not limited to, projections of income or loss, expenses, acquisitions, plans for the future and others.

The accounting and reporting of First Citizens Bancshares and its subsidiaries conform with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect  amounts reported in the financial statements and accompanying notes. The company's estimates are based on historical experience, information supplied from professionals, regulators, and others believed to be reasonable under the facts and circumstances. Actual results could differ from estimates. First Citizens considers its more critical accounting policies to consist of the allowance for loan losses and the estimation of fair market value.

The allowance for losses on loans represents management's best estimate of inherent losses in the existing loan portfolio. Management's policy is to maintain the allowance for loan losses at a level sufficient to absorb reasonably estimated and probable losses within the portfolio. The company believes the loan loss reserve estimate is a critical accounting estimate because: changes can materially affect bad debt expense on the income statement, changes in the borrower's cash flows can impact the reserve, and management must make estimates at the balance sheet date and also into the future in reference to the reserve. While management uses the best information available to establish the allowance for loan losses, future adjustments may be necessary if economic or other conditions change materially.

Fair values for First Citizens' available for sale investments are based on quoted market prices supplied by a third party. In situations where quoted market prices are not available, fair values are based on quoted prices of similar instruments.

The company's policy is to review goodwill for impairment at the reporting unit level on an annual basis unless an event occurs that would impair the goodwill amount. Goodwill represents the excess of the cost of an acquired entity over the fair value assigned to the assets and liabilities. Management believes accounting estimates associated with determining fair value as part of the goodwill test is a critical accounting estimate because estimates and assumptions are made based on prevailing market factors, historical earnings and multiples and other contingencies.

Management has discussed critical accounting policies with the Audit Committee, and the Audit Committee has reviewed the Company's disclosure relating to these policies in this Management's Discussion and Analysis.

Net interest income is the principal source of earnings for First Citizens and is defined as the amount of interest generated by earning assets minus the interest cost to fund those assets. Net interest income decreased $39 thousand or (.62%), when comparing first quarter of 2004 to the first quarter 2003. Total interest bearing liabilities declined 47 basis points while interest-earning assets declined 79 basis points. Demands for re-financing, competition, and variable rate volumes drove loan yields downward 91 basis points when comparing 2004 to 2003. Time deposit average paying rates had the most dramatic decrease (61 basis points). Bancshares' savings yields have very little room to decline as evidenced in the change from 2003 (-21 basis points).  Federal Home Loan Bank borrowings of $64 million carries a yield of 5.37%, resulting in a quarterly dilution to net interest income of $521 thousand when compared to average cost of funds of 2.11%. Federal Home Loan Borrowings were used to fund balance sheet and reduce exposure to rising interest rates. As rates rise, these borrowings will be fixed, causing a reduction to interest rate risk. Net interest margins have been challenged over the past two years as the Federal Reserve lowered interest rates in an effort to stimulate the national economy. Low interest rates resulted in substantial prepayments, higher premium amortization, and in-house loan refinancing. Net yield on average earning assets for the past three reportable periods are 3.89%, 4.20%, and 4.58%. The most positive side of the low interest rate environment is fee income received from secondary mortgage lending fees. A review of the last eight quarters starting with the most recent reflects the following total: $296 thousand, $506 thousand, $498 thousand, $422 thousand, $336 thousand, $239 thousand, $169 thousand and $158 thousand. It is anticipated that the prior quarter mortgage fee income trends will not continue at these high levels.

The loan loss provision increased $20 thousand or 7.14% over the prior reporting period. Quarterly net charge-offs for 2004 were $77 thousand compared to $21 thousand for the three months in 2003.  A low or flat net charge off total in 2004 and 2003 was a result of improved quality within the loan portfolio.  Reserve for losses on loans as a percent of total loans was 1.25% at March 2004 compared to 1.26% at March 2003.   The reserve as a percent of total loans for fourth quarter 2003 was 1.25%.

Non-interest income represents fees and other income derived from sources other than interest-earning assets. Non-interest income increased $360 thousand, or 17.25% over the prior year's first quarter. In the first quarter of 2004, fee income (non-interest income) contributed 20.62% to total revenue compared to 17.21% for the same period last year. Trust service fees, Brokerage fees, full insurance income and sale of bonds contributed to the positive 20.62% variance. Income received from White and Associates/First Citizens insurance subsidiary was in excess of $8,000 over prior quarter of last year. Bond profits ($206 thousand) were taken first quarter due to demand opportunities for those specific bonds. The following table compares non-interest income for the first quarter of 2004, 2003, and 2002:

Non-interest expenses represent the operating expenses of First Citizens. Non-interest expense increased $227 thousand, or 4.21%, over the first quarter of 2003. Salary and benefits increased because of full time salaries, and incentive accruals. Bancshares' growth strategies are increasing certain sectors of the non-interest expense areas such as depreciation (8.72%). Tight budget controls and incentives have stabilized the growth of the controllable expenses as shown in the other expense decrease of (4.87%). The efficiency ratio as of 3/31/2004 and 3/31/2003 was 63.23% and 64.75%.  Executive management is committed to the continual improvement of the efficiency ratio that will meet or exceed peer group ratio. Expense other real estate was $13 thousand for current quarter compared to $35,000 thousand for first quarter 2003. Other real estate asset was $1.8 million as of December 2002 compared to $400-500 million for the two reportable balance sheet periods.  Impaired Goodwill expense is $0 for the current reportable period compared to $0 for 2003. The core deposit intangible expense for the current reportable quarter was $21,000. FASB 142 altered the analysis of goodwill for the years 2002 forward. Quarter-to-date advertising, community relations, and other forms of marketing expenses were $107 thousand or 1.90% of total non-interest expense. All marketing or advertising items are expensed at the time they are incurred.

The following table compares non-interest expense for the first quarter of 2004, 2003, and 2002:

Quarterly average balances, interest, and average rates are presented in the following table:

FIRST CITIZENS BANCSHARES, INC.,
AND SUBSIDIARY
MONTHLY AVERAGE BALANCES AND INTERST RATES
(STATED IN THOUSANDS)
QUARTER ENDING MARCH 31