Filed pursuant to Rule 424(b)(5)
Registration No. 333-197512

PROXY STATEMENT/PROSPECTUS

First Citizens Bancshares, Inc., holding company for

MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT

       The boards of directors of First Citizens Bancshares, Inc. (“First Citizens”) and Southern Heritage Bancshares, Inc. (“SHB”) have approved an agreement and plan of merger, as amended (the “Merger Agreement”), to merge our two companies. If SHB shareholders approve the Merger Agreement and the transactions contemplated thereby, and the merger is completed, SHB will merge with and into First Citizens and SHB shareholders (other than SHB shareholders who properly exercise their right to dissent from the merger and subject to all applicable securities laws) will have the right to receive an aggregate of (i) $16,085,903.75 in cash, subject to adjustment as set forth in the Merger Agreement, and (ii) 377,658 shares of First Citizens stock, subject to adjustment as set forth in the Merger Agreement and as described below, of the following classes depending on the class of SHB stock held by them: 269,302 shares of First Citizens common stock and 108,356 shares of First Citizens Class A common stock.

       If the merger is completed, each share of SHB stock issued and outstanding immediately prior to the effective time of the merger will, subject to the election described under “The Merger Agreement - Terms of the Merger” beginning on Page 63 of this Proxy Statement/Prospectus, be converted into the right to receive (i) $12.25 in cash, plus (ii) 0.2876 of a share of First Citizens stock. Following arms’-length negotiations between First Citizens and SHB, the per-share value of First Citizens common stock and First Citizens Class A common stock was agreed to be $42.60 per share on the effective date of the Merger Agreement. Based on a value of First Citizens common stock and Class A common stock of $42.60 per share, and assuming no adjustments to the merger consideration, the aggregate per-share merger consideration to SHB shareholders would be $24.50. In certain circumstances described in more detail below, which circumstances SHB’s management does not currently expect, the cash portion of the merger consideration may be adjusted downwards such that, if in the extraordinary circumstance that SHB’s net worth on the Closing Date has dropped by as much as $16,085,903.75, SHB shareholders would receive only First Citizens stock and no cash consideration, in which case the aggregate per-share merger consideration to SHB shareholders would be $12.25.

       As noted above, the aggregate merger consideration payable to SHB shareholders is subject to certain adjustments as set forth in the Merger Agreement in the event that two specific circumstances occur. First, if SHB’s accumulated other comprehensive income as of the closing date is a loss of greater than $3.4 million, then First Citizens may increase the number of shares issued as merger consideration so that up to 55% of the aggregate merger consideration is comprised of First Citizens stock. Second, if SHB’s minimum net worth at closing (SHB’s total shareholders’ equity, excluding (i) SHB’s Series D Preferred Stock, (ii) accumulated other comprehensive income (loss), (iii) all merger costs if paid or accrued by SHB or any subsidiary of SHB and not reimbursed by SHB prior to the closing date and (iv) any accruals, provisions or charges taken by SHB at the written direction of First Citizens) is less than the required minimum of $22,863,000 set forth in the Merger Agreement, then the cash portion of the merger consideration will be adjusted downward dollar for dollar by the amount of such shortfall. If the closing were to have occurred on August 15, 2014, the latest practicable date prior to the date of first mailing of this Proxy Statement/Prospectus, SHB’s closing net worth would have been $23,628,000, and there would accordingly have been no downward adjustment to the cash portion of the merger consideration, and SHB’s management expects that in the ordinary course of business, which SHB’s management believes will be the case, the closing equity at the date of determination will be greater than or equal to $22,863,000. However, in the event of an extraordinary set of circumstances which SHB’s management does not currently expect, SHB’s closing net worth could be significantly less than $22,863,000. In such extraordinary circumstances, and assuming First Citizens did not elect to exercise its right to terminate the Merger Agreement for breach of the representation of the absence of certain changes or events pursuant to the Merger Agreement, the per share merger consideration to SHB shareholders

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could be significantly lower than $24.50 per share, and if the closing equity were to drop to as low as $6,777,096.50, then SHB shareholders would receive no cash consideration and would receive only First Citizens stock for their SHB stock of 0.2876 shares of First Citizens stock for each share of SHB stock. For additional information on the possibility of a downward adjustment to the cash portion of the merger consideration, see “The Merger Agreement - Terms of the Merger” beginning on Page 63 of this Proxy Statement/Prospectus.

       SHB shareholders who hold SHB common stock shall receive First Citizens common stock and SHB shareholders who hold SHB Class A common stock, SHB Class B common stock or SHB Series A preferred stock shall receive First Citizens Class A common stock. In lieu of the issuance of any fractional shares of First Citizens stock, First Citizens will pay to each former SHB shareholder who would otherwise be entitled to receive such fractional share an amount in cash determined by multiplying (i) $42.60 by (ii) the fraction of a share of First Citizens common stock to which such holder would otherwise be entitled to receive. All holders of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock shall have the right to vote on the merger; however, only holders of SHB common stock have the right to vote with respect to the other proposals to be submitted at the annual meeting of SHB shareholders.

       First Citizens stock is not currently listed or traded on any securities exchange or quotation system. Neither the common stock nor the preferred stock of SHB is listed or traded on any securities exchange or quotation system. First Citizens may not issue its stock to residents of any state in which the offering of these securities is not registered or eligible for a claim of exemption from registration.

       We cannot complete the merger unless we obtain the necessary governmental approvals and unless the shareholders of SHB approve the merger agreement. The board of directors of SHB unanimously recommends that you vote in favor of the merger agreement.

       This Proxy Statement/Prospectus provides you with detailed information about the proposed merger between First Citizens and SHB. This document also contains information about First Citizens and SHB. We encourage you to carefully read and consider this Proxy Statement/Prospectus in its entirety.

       You should carefully consider the risk factors described beginning on page 14 of this Proxy Statement/Prospectus.

       First Citizens is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, may elect to comply with certain reduced public company reporting requirements after this offering.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this Proxy Statement/Prospectus or determined if this Proxy Statement/Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

       This Proxy Statement/Prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this Proxy Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer, solicitation of an offer or proxy solicitation in such jurisdiction.

       Shares of First Citizens stock are not savings or deposit accounts or other obligations of any bank or savings association, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this Proxy Statement/Prospectus is August 29, 2014,
and it is first being mailed to the shareholders of SHB on or about August 29, 2014.

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Southern Heritage Bancshares, Inc.,
The holding company for

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 25, 2014

TO THE SHAREHOLDERS OF SOUTHERN HERITAGE BANCSHARES, INC.:

       This serves as notice to you that an annual meeting of shareholders of Southern Heritage Bancshares, Inc. (“SHB”) will be held on September 25, 2014, at 5:00 PM Eastern Time, at 3020 Keith Street NW, Cleveland, Tennessee 37312, for the following purposes:

       1. Merger Proposal. Considering and voting upon the approval of the agreement and plan of merger, as amended (the “Merger Agreement”), dated as of March 20, 2014, between SHB and First Citizens Bancshares, Inc. (“First Citizens”), which provides for the merger of SHB with and into First Citizens as more fully described in the accompanying Proxy Statement/Prospectus, and the transactions contemplated by the Merger Agreement;

       2. Election of Directors. Electing two Class III members of the board of directors to serve three-year terms until the annual meeting of shareholders in 2017 or until their successors have been duly elected and qualified. Note that upon the effective date of the merger, if approved and then consummated, the directors of SHB will no longer serve as directors of SHB, but since the same directors generally are elected as the directors of Southern Heritage Bank, they will continue to serve in that capacity;

       3. Adjournment. If necessary, adjourning the annual meeting to a later date; and

       4. Other Business. Transacting such other business as may properly come before the annual meeting or any adjournment of the annual meeting.

       All holders of record of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock at the close of business on August 21, 2014 (the “record date”) are entitled to notice of and to vote on the merger. Each share of SHB stock is entitled to one vote. Approval of the Merger Agreement requires approval by an affirmative vote of at least a majority of the outstanding shares of SHB stock entitled to vote on the proposal, voting as separate classes. Only holders of SHB common stock at the close of business on the record date have the right to vote with respect to the other proposals to be submitted at the annual meeting of SHB shareholders.

       The board of directors of SHB has unanimously approved the Merger Agreement and the transactions contemplated thereby and recommends that SHB shareholders vote “FOR” approval of the Merger Agreement and the transactions contemplated thereby.

       Under the terms of the Merger Agreement, if the Merger Agreement is approved and the merger is completed, all outstanding shares of SHB stock will be converted into the right to receive an aggregate of (i) $16,085,903.75 in cash, subject to adjustment as set forth in the Merger Agreement, and (ii) 377,658 shares of First Citizens stock, subject to adjustment as set forth in the Merger Agreement, of the following classes depending on the class of SHB stock held by SHB’s shareholders: 269,302 shares of First Citizens common stock and 108,356 shares of First Citizens Class A common stock.

       If the merger is completed, each share of SHB stock issued and outstanding immediately prior to the effective time of the merger will, subject to the election described under “The Merger Agreement - Terms of the Merger” beginning on Page 63 of this Proxy Statement/Prospectus, be converted into the right to receive (i) $12.25 in cash, plus (ii) 0.2876 of a share of First Citizens stock. Following arms’-length negotiations between First Citizens and SHB, the per-share value of First Citizens common stock and First Citizens Class A common stock was agreed to be $42.60 per share on the effective date of the Merger Agreement. Based on a value of First Citizens common stock and Class A common stock of $42.60 per share, and assuming no adjustments to the merger consideration, the aggregate per-share merger consideration to SHB shareholders would be $24.50. In certain circumstances described in more detail below, which circumstances SHB’s management does not currently expect, the cash portion of the merger consideration may be adjusted downwards such that, if in the extraordinary circumstance that SHB’s net worth on the Closing Date has dropped by as much as $16,085,903.75, SHB shareholders would receive only First Citizens stock and no cash consideration, in which case the aggregate per-share merger consideration to SHB shareholders would be $12.25.

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       As noted above, the aggregate merger consideration payable to SHB shareholders is subject to certain adjustments as set forth in the Merger Agreement in the event that two specific circumstances occur. First, if SHB’s accumulated other comprehensive income as of the closing date is a loss of greater than $3.4 million, then First Citizens may increase the number of shares issued as merger consideration so that up to 55% of the aggregate merger consideration is comprised of First Citizens stock. Second, if SHB’s minimum net worth at closing (SHB’s total shareholders’ equity, excluding (i) SHB’s Series D Preferred Stock, (ii) accumulated other comprehensive income (loss), (iii) all merger costs if paid or accrued by SHB or any subsidiary of SHB and not reimbursed by SHB prior to the closing date and (iv) any accruals, provisions or charges taken by SHB at the written direction of First Citizens) is less than the required minimum of $22,863,000 set forth in the Merger Agreement, then the cash portion of the merger consideration will be adjusted downward dollar for dollar by the amount of such shortfall. If the closing were to have occurred on August 15, 2014, the latest practicable date prior to the date of first mailing of this Proxy Statement/Prospectus, SHB’s closing net worth would have been $23,628,000, and there would accordingly have been no downward adjustment to the cash portion of the merger consideration, and SHB’s management expects that in the ordinary course of business, which SHB’s management believes will be the case, the closing equity at the date of determination will be greater than or equal to $22,863,000. However, in the event of an extraordinary set of circumstances which SHB’s management does not currently expect, SHB’s closing net worth could be significantly less than $22,863,000. In such extraordinary circumstances, and assuming First Citizens did not elect to exercise its right to terminate the Merger Agreement for breach of the representation of the absence of certain changes or events pursuant to the Merger Agreement, the per share merger consideration to SHB shareholders could be significantly lower than $24.50 per share, and if the closing equity were to drop to as low as $6,777,096.50, then SHB shareholders would receive no cash consideration and would receive only First Citizens stock for their SHB stock of 0.2876 shares of First Citizens stock for each share of SHB stock. For additional information on the possibility of a downward adjustment to the cash portion of the merger consideration, see “The Merger Agreement - Terms of the Merger” beginning on Page 63 of this Proxy Statement/Prospectus.

       SHB shareholders who hold SHB common stock shall receive First Citizens common stock and SHB shareholders who hold SHB Class A common stock, SHB Class B common stock or SHB Series A preferred stock shall receive First Citizens Class A common stock. In lieu of the issuance of any fractional shares of First Citizens stock, First Citizens will pay to each former SHB shareholder who would otherwise be entitled to receive such fractional share an amount in cash determined by multiplying (i) $42.60 by (ii) the fraction of a share of First Citizens common stock to which such holder would otherwise be entitled to receive. All holders of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock shall have the right to vote on the merger; however, only holders of SHB common stock have the right to vote with respect to the other proposals to be submitted at the annual meeting of SHB shareholders.

       Notice of Right to Dissent. Dissenting SHB shareholders who comply with the procedural requirements of Chapter 23 of the Tennessee Business Corporation Act will be entitled to receive payment of the “fair value” of their shares. A copy of Chapter 23 of the Tennessee Business Corporation Act containing the procedural requirements to exercise dissenters’ rights is attached as Annex B to the accompanying Proxy Statement/Prospectus. In addition, please see the section entitled “PROPOSAL 1: THE MERGER – Dissenters’ Rights” in the accompanying Proxy Statement/Prospectus for a discussion of the procedures to be followed in asserting these dissenters’ rights.

       Please vote through the Internet or mark, sign, date and return the enclosed proxy card promptly, whether or not you plan to attend the annual meeting. All SHB shareholders are invited to attend the annual meeting. To ensure your representation at the annual meeting, please complete and promptly mail the enclosed proxy card in the enclosed postage paid business reply envelope or vote through the Internet by visiting the following website: www.voteproxy.com. This will not prevent you from voting in person, but will help to secure a quorum and avoid added solicitation costs. If you do not vote your proxy and do not attend the annual meeting in order to vote in person, the effect will be the same as a vote against the Merger Agreement and the transactions contemplated thereby. You may revoke your proxy at any time before it is voted.

       Please review the Proxy Statement/Prospectus accompanying this notice for more complete information regarding the proposed merger and the annual meeting.

August 29, 2014

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TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ANNUAL MEETING	1
SUMMARY	5
The Companies (Pages 75, 123)	5
The Merger (Page 43)	5
What SHB Shareholders Will Receive in the Merger (Page 63)	5
The Board of Directors of SHB Recommends that its Shareholders Approve the Merger Agreement (Page 44)	6
Vote Required to Complete the Merger (Page 41)	6
Annual Meeting (Page 40)	7
Vote Required on Other Matters (Page 41)	8
Record Date and Voting Rights On the Merger (Page 41)	8
Background of the Merger (Page 43)	8
Why First Citizens and SHB are Seeking to Merge (Page 44)	8
Opinion of Financial Advisor to SHB (Page 46)	9
Opinion of Financial Advisor to First Citizens (Page 50)	9
Management and Board of Directors of First Citizens Following the Merger (Page 72)	9
Material U.S. Federal Income Tax Consequences of the Merger (Page 55)	9
Accounting Treatment (Page 55)	9
Interests of SHB Management and Directors in the Merger (Page 61)	10
SHB Shareholders May Dissent from the Merger (Page 58)	10
We Must Obtain Regulatory Approvals to Complete the Merger (Page 54)	10
Conditions to Complete the Merger (Page 70)	11
Termination of the Merger Agreement (Page 71)	12
Termination Fee (Page 71)	13
Comparative Per Share Market Price Information (Page 74)	13
Comparison of Rights of Shareholders (Page 159)	13
RISK FACTORS	14
Risks Related to the Merger	14
Risks Related to First Citizens and First Citizens Stock	17
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF FIRST CITIZENS	21
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF SHB	23
UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION	25
UNAUDITED COMPARATIVE PER SHARE DATA	37
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION	38
THE ANNUAL MEETING	40
General	40
Proxies	40
Solicitation of Proxies	41
Record Date and Voting Rights On the Merger	41
Vote Required on Other Matters	41
Recommendation of Board of Directors	42
Dissenters’ Rights	42
Certain Matters Relating to Proxy Materials	42
PROPOSAL 1: THE MERGER	43
Introduction	43
Description of the Merger	43
Background of the Merger	43
Reasons for the Merger; Recommendation of the Board of Directors	44
Opinion of Financial Advisor to SHB	46

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Opinion of Financial Advisor to First Citizens	50
Regulatory Approval	54
Accounting Treatment	55
Material United States Federal Income Tax Consequences	55
Dissenters’ Rights	58
Interests of Certain Persons in the Merger	61
Comparison of Rights of Shareholders	61
Restrictions on Resales by Affiliates	61
Source of Funds for Cash Portion of Merger Consideration	62
THE MERGER AGREEMENT	63
General	63
Terms of the Merger	63
Treatment of Options	64
Exchange of Certificates in the Merger	65
Fractional Shares	65
Dividends and Distributions	65
Effective Time	65
Representations and Warranties	66
Conduct of Business Prior to the Merger and Other Covenants	67
Conditions to the Completion of the Merger	70
Director Support Agreements	70
Employment Agreements	71
Release by Officers and Directors of SHB	71
Termination of the Merger Agreement	71
Termination Fee	71
Indemnification	72
Amendment of the Merger Agreement	72
Waiver	72
Expenses	72
Management and Operations Following the Merger	72
PRICE RANGE OF STOCK AND DIVIDENDS	74
First Citizens	74
SHB	74
INFORMATION ABOUT FIRST CITIZENS	75
Business	75
Expansion	76
Competition	77
Regulation and Supervision	78
Properties	81
Legal Proceedings	82
Market for First Citizens’ Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	83
Dividends	83
Issuer Purchases of Equity Securities	83
Unregistered Sales of Securities	83
Management’s Discussion and Analysis of Financial Condition and Results of Operations	84
Interest Rate Sensitivity	108
Emerging Growth Company Status	111
Management of First Citizens	111
Corporate Governance	115
Security Ownership of Certain Beneficial Owners and Management of First Citizens	116
Executive Compensation	117
Director Compensation	121
Certain Relationships and Related Person Transactions; Director Independence	121

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INFORMATION ABOUT SHB		123
Business		123
Competition		124
Regulation and Supervision		124
Properties		126
Legal Proceedings		126
Market for SHB’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities		126
Dividends		126
Issuer Purchases of Equity Securities		127
Unregistered Sales of Securities		127
Management’s Discussion and Analysis of Financial Condition and Results of Operations		127
Interest Rate Sensitivity		148
Management of SHB		150
Corporate Governance		152
Security Ownership of Certain Beneficial Owners and Management of SHB		153
Executive Compensation		154
Certain Relationships and Related Person Transactions		154
DESCRIPTION OF FIRST CITIZENS CAPITAL STOCK		156
Introduction		156
Authorized Capital Stock		156
Common Stock		156
Class A Common Stock		156
Preferred Stock		158
Transfer Agent and Registrar		158
COMPARISON OF RIGHTS OF SHAREHOLDERS		159
PROPOSAL 2: ELECTION OF DIRECTORS		168
INFORMATION ABOUT THE BOARD OF DIRECTORS		169
Role of the Board		169
2013 Board Meetings		169
Board Committees		169
Director Compensation		169
PROPOSAL 3: ADJOURNMENT		170
PROPOSAL 4: OTHER BUSINESS		171
WHERE YOU CAN FIND MORE INFORMATION		172
ANNUAL SHAREHOLDER MEETING AND SHAREHOLDER PROPOSALS		173
First Citizens		173
SHB		173
LEGAL MATTERS		174
EXPERTS		175
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1
Annex A:	Agreement and Plan of Merger, as amended	A-1
Annex B:	Chapter 23 of the Tennessee Business Corporation Act Relating to Dissenters’ Rights	B-1
Annex C:	Opinion of FIG Partners, LLC	C-1
Annex D:	Opinion of Olsen Palmer LLC	D-1

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QUESTIONS AND ANSWERS
ABOUT THE MERGER AND THE ANNUAL MEETING

	The following are some questions that you may have regarding the merger and the SHB annual meeting and brief answers to those questions. We urge you to carefully read the remainder of this Proxy Statement/Prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the annual meeting.
Q:	What am I being asked to vote on?
A:	If you are a record holder of SHB common stock, SHB Class A common stock, SHB Class B common stock or SHB Series A preferred stock, you are being asked to vote on a proposal to approve a merger in which SHB will merge with and into First Citizens, with First Citizens surviving. Southern Heritage Bank will become a wholly-owned subsidiary of First Citizens. After the merger, SHB shareholders will no longer own shares of SHB stock and will receive the per share merger consideration.
	In addition, if you are a holder of SHB common stock, you are also being asked to vote on the following proposals:

	Election of Directors. To elect two Class III members of the board of directors to serve three-year terms until the annual meeting of shareholders in 2017 or until their successors have been duly elected and qualified. Note that upon the effective date of the merger, if approved and then consummated, the directors of SHB will no longer serve as directors of SHB, but since the same directors generally are elected as the directors of Southern Heritage Bank, they will continue to serve in that capacity. Adjournment. If necessary, to adjourn the annual meeting to a later date. Other Business. To transact such other business as may properly come before the annual meeting or any adjournment of the annual meeting.
Q:	Why is SHB merging with First Citizens?
A:	SHB is merging with First Citizens because the boards of directors of both companies believe that the merger will provide shareholders of both companies with substantial benefits and will enable the combined company to better serve customers. The combined company would have a presence throughout West and East Tennessee. A detailed discussion of the background of and reasons for the proposed merger is contained under the headings “PROPOSAL 1: THE MERGER - Background of the Merger,” and “PROPOSAL 1: THE MERGER - Reasons for the Merger; Recommendation of the Board of Directors.”
Q:	What do I need to do now?
A:	After you carefully read this Proxy Statement/Prospectus, please vote using the Internet by visiting the following website: www.voteproxy.com or, if you have been provided a proxy card, please vote it promptly by indicating on the enclosed proxy card how you want to vote, and by signing and mailing the proxy card in the enclosed postage-paid business reply envelope as soon as possible so that your shares may be represented at the annual meeting of shareholders. Do not send in your stock certificates now.
	Regardless of whether you plan to attend the annual meeting in person, if you are a SHB shareholder, we encourage you to vote your proxy promptly. This will help to ensure that a quorum is present at the annual meeting and will help reduce the costs associated with the solicitation of proxies.
	The board of directors of SHB unanimously recommends that SHB shareholders vote “FOR” approval of the Merger Agreement and the transactions contemplated thereby and that holders of SHB common stock vote “FOR” the election of two Class III directors to serve until the 2017 annual meeting of shareholders.
Q:	Why is my vote important?
A:	Pursuant to the Tennessee Business Corporation Act, the Merger Agreement must be approved by a majority of all the votes of each class entitled to be cast by SHB shareholders, with each class of stock voting separately. Therefore, a majority of the outstanding shares of SHB stock held by SHB shareholders, present in person or by proxy at the annual meeting, must vote to approve the Merger Agreement. Accordingly, if you abstain, it will have the same effect as a vote AGAINST approval of the Merger Agreement.

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Q:	Can I change my vote after I have delivered my proxy card?
A:	You may change your vote at any time before your proxy is voted at the meeting. You can do this in any of the following four ways:

	by sending a written notice to the corporate secretary of SHB in time to be received before the annual meeting stating that you would like to revoke your proxy; by completing, signing and dating another proxy card and returning it by mail in time to be received before the annual meeting, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; re-vote by using the Internet and visiting the following website: www.voteproxy.com; or if you are a SHB shareholder, by attending the annual meeting and voting in person, although attendance by itself will not revoke a previously granted proxy.
	If your shares are held in an account at a broker, you should contact your broker to change your vote.
Q:	If my shares are held in “street name” by my broker, will my broker vote my shares for me?
A:	NOT WITH RESPECT TO THE PROPOSAL TO APPROVE THE MERGER AGREEMENT OR TO ELECT DIRECTORS. You should instruct your broker to vote your shares, following the directions your broker provides. Your broker will not have the discretion to vote your shares on the proposal to approve the Merger Agreement or on the proposal to elect two Class III directors. Failure to instruct your broker how to vote your shares on the proposal to approve the Merger Agreement will have the same effect as voting AGAINST the Merger Agreement.
Q:	What is the aggregate amount of consideration to be paid by First Citizens in the merger?
A:	Under the terms of the Merger Agreement, if the Merger Agreement is approved and the merger is completed, the outstanding shares of SHB stock will be converted into the right to receive an aggregate of (i) $16,085,903.75 in cash, subject to adjustment as set forth in the Merger Agreement, and (ii) 377,658 shares of First Citizens stock, subject to adjustment as set forth in the Merger Agreement.
Q:	What will I receive in connection with the merger?
A:	If the merger is completed, each share of SHB stock issued and outstanding immediately prior to the effective time of the merger will, subject to the election described below, be converted into the right to receive (i) $12.25 in cash, plus (ii) 0.2876 of a share of First Citizens stock. Shareholders of SHB who hold more than one share of SHB stock may elect to receive consideration in exchange for each share of SHB common stock in the form of: (a) 0.5751 shares of First Citizens stock or (b) $24.50 in cash, subject to adjustment pursuant to the merger consideration adjustments as provided in the Merger Agreement, including First Citizens’ rights to adjust the aggregate merger consideration such that, in the aggregate, no more than 377,658 shares of First Citizens stock will be issued in connection with the merger. Following arms’-length negotiations between First Citizens and SHB, the per-share value of First Citizens common stock and First Citizens Class A common stock was agreed to be $42.60 per share on the effective date of the Merger Agreement. Based on a value of First Citizens common stock and Class A common stock of $42.60 per share, and assuming no adjustments to the merger consideration, the aggregate per-share merger consideration to SHB shareholders would be $24.50. In certain circumstances described in more detail below, which circumstances SHB’s management does not currently expect, the cash portion of the merger consideration may be adjusted downwards such that, if in the extraordinary circumstance that SHB’s net worth on the Closing Date has dropped by as much as $16,085,903.75, SHB shareholders would receive only First Citizens stock and no cash consideration, in which case the aggregate per-share merger consideration to SHB shareholders would be $12.25.
	As noted above, the aggregate merger consideration payable to SHB shareholders is subject to certain adjustments as set forth in the Merger Agreement in the event that two specific circumstances occur. First, if SHB’s accumulated other comprehensive income as of the closing date is a loss of greater than $3.4 million, then First Citizens may increase the number of shares issued as merger consideration so that up to 55% of the aggregate merger consideration is comprised of First Citizens stock. Second, if SHB’s minimum net worth at closing (SHB’s total shareholders’ equity, excluding (i) SHB’s Series D Preferred Stock, (ii) accumulated other comprehensive income (loss), (iii) all merger costs if paid or accrued by SHB or any subsidiary of SHB and not reimbursed by SHB prior to the closing date and (iv) any accruals, provisions or charges taken by SHB at the written direction of First Citizens) is less than the required minimum of $22,863,000 set forth in the Merger Agreement, then the cash portion of the merger consideration will be adjusted downward dollar for dollar by the amount of such shortfall. If the closing were to have occurred on August 15, 2014, the latest practicable date prior to the date of first mailing of this Proxy Statement/Prospectus, SHB’s closing net worth would have been $23,628,000, and there would accordingly have been no downward adjustment to the cash portion of the merger consideration, and SHB’s management expects that in the ordinary course of business, which

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	SHB’s management believes will be the case, the closing equity at the date of determination will be greater than or equal to $22,863,000. However, in the event of an extraordinary set of circumstances which SHB’s management does not currently expect, SHB’s closing net worth could be significantly less than $22,863,000. In such extraordinary circumstances, and assuming First Citizens did not elect to exercise its right to terminate the Merger Agreement for breach of the representation of the absence of certain changes or events pursuant to the Merger Agreement, the per share merger consideration to SHB shareholders could be significantly lower than $24.50 per share, and if the closing equity were to drop to as low as $6,777,096.50, then SHB shareholders would receive no cash consideration and would receive only First Citizens stock for their SHB stock of 0.2876 shares of First Citizens stock for each share of SHB stock. For additional information on the possibility of a downward adjustment to the cash portion of the merger consideration, see “The Merger Agreement - Terms of the Merger” beginning on Page 63 of this Proxy Statement/Prospectus.
	SHB shareholders who hold SHB common stock shall receive First Citizens common stock and SHB shareholders who hold SHB Class A common stock, SHB Class B common stock or SHB Series A preferred stock shall receive First Citizens Class A common stock. In lieu of the issuance of any fractional shares of First Citizens stock, First Citizens will pay to each former SHB shareholder who would otherwise be entitled to receive such fractional share an amount in cash determined by multiplying (i) $42.60 by (ii) the fraction of a share of First Citizens common stock to which such holder would otherwise be entitled to receive.
Q:	Who will be on the board of directors of First Citizens after the merger?
A:	Following the merger, the board of directors of First Citizens will consist of 19 members. Eighteen of these directors will be the current members of the board of directors of First Citizens. For more information on these individuals, see “INFORMATION ABOUT FIRST CITIZENS - Management of First Citizens.” J. Lee Stewart, the current president and chief executive officer of SHB, will be joining the First Citizens board of directors as the 19th member. He will also be joining the First Citizens National Bank board of directors. If, prior to the closing date, Mr. Stewart becomes unavailable for any reason to serve as a member of the board of directors of First Citizens or First Citizens National Bank following the merger, the boards of directors of First Citizens and First Citizens National Bank will continue with their current members. See “THE MERGER AGREEMENT - Management and Operations Following the Merger” for biographical information with respect to Mr. Stewart.
Q:	What are the material U.S. federal income tax consequences of the merger to the shareholders?
A:	The merger has been structured and is intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). As a result of the merger’s qualification as a reorganization, it is anticipated that SHB shareholders will not recognize gain or loss for U.S. federal income tax purposes on the exchange of shares of SHB stock for shares of First Citizens stock, except with respect to cash received in connection with the merger and cash delivered in lieu of fractional shares of First Citizens stock and except for SHB shareholders who exercise their dissenters’ rights with respect to the merger.
	This tax treatment may not apply to all SHB shareholders. You are urged to consult your own tax advisor for a full understanding of the merger’s tax consequences that are particular to you.
Q:	What is the purpose of this Proxy Statement/Prospectus?
A:	This document serves as SHB’s proxy statement and as First Citizens’ prospectus. As a proxy statement, this document is being provided to SHB’s shareholders because SHB’s board of directors is soliciting proxies to vote to approve the Merger Agreement, the election of directors and other business that may properly come before the meeting. As a prospectus, this document is being provided to SHB’s shareholders by First Citizens because First Citizens is offering shares of First Citizens stock in exchange for their shares of SHB’s stock if the merger is completed.
Q:	Should I send in my SHB stock certificates now?
A:	No. You should not send in your stock certificates at this time. If the merger is approved by the SHB shareholders, then shortly after the annual meeting, the exchange agent will send SHB shareholders written instructions for exchanging SHB stock certificates for First Citizens stock certificates, including a letter of transmittal and an election form with instructions. The allocation of the mix of consideration payable to each SHB shareholder will not be finally determined until the exchange agent tallies the results of the stock and cash elections made by SHB shareholders, which will not occur until after the deadline specified in the election form.

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Q:	What happens if I do not make a valid election under the election form?
A:	If you do not return a properly completed election form by the deadline specified in the election form, your shares of SHB stock will be considered “non-election shares” and, in accordance with the terms of the Merger Agreement, you will be entitled to receive for each share of SHB stock you hold cash consideration of $12.25 and stock consideration of 0.2876 of a share of First Citizens stock (plus cash in lieu of any fractional shares), subject to adjustment as described in the Merger Agreement.
Q:	Do I have the right to dissent and obtain the “fair value” for my shares?
A:	Yes, if you are a SHB shareholder, Tennessee law permits you to dissent from the merger and to obtain payment in cash of the “fair value” of your shares of SHB stock. To do this, an SHB shareholder must follow specific procedures, including delivering written notice to SHB of his or her intent to demand payment for his or her shares if the merger is completed. This notice must be delivered to SHB before the shareholder vote on the Merger Agreement is taken and a dissenting SHB shareholder must not vote his or her shares in favor of the Merger Agreement. If an SHB shareholder follows the required procedures, his or her only right will be to receive the “fair value” of his or her SHB stock in cash if the merger is completed. If a shareholder thinks that he or she may desire to dissent, then such person should not send in a proxy unless it is marked to vote against the merger. Copies of the applicable Tennessee statutes are attached to this Proxy Statement/Prospectus as Annex B. See “PROPOSAL 1: THE MERGER - Dissenters’ Rights.”
	Tennessee law does not provide dissenters’ rights to First Citizens’ shareholders.
Q:	Whom do I contact if I have questions about the merger?
A:	If you have questions about the merger, including about the procedures for voting your shares, you should contact:
	Southern Heritage Bancshares, Inc.           3020 Keith Street NW           Cleveland, Tennessee 37312           Attention: J. Lee Stewart, President and Chief Executive Officer           Phone Number: (423) 473-7980
Q:	When and where will the annual meeting of shareholders of SHB be held?
A:	The annual meeting of shareholders of SHB will be held on September 25, 2014, at 5:00 PM Eastern Time, at 3020 Keith Street NW, Cleveland, Tennessee 37312.
Q:	Who is entitled to vote at the annual meeting of shareholders of SHB?
A:	All holders of record of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock at the close of business on August 21, 2014 are entitled to notice of and to vote on the merger. Only holders of SHB common stock at the close of business on the record date have the right to vote with respect to the other proposals to be submitted at the annual meeting of SHB shareholders.
Q:	When do you expect the merger to be completed?
A:	We expect to complete the merger during the fourth quarter of 2014, although delays could occur. We received approval from the Federal Reserve System (the “Federal Reserve”) on May 13, 2014, and the Federal Reserve has extended the deadline by which the merger must close to November 13, 2014. We received approval from the Tennessee Department of Financial Institutions (the “TDFI”) on July 24, 2014. The next step is to obtain the approval of SHB shareholders at their annual shareholders meeting.
Q:	Are there any risks I should consider in deciding whether I vote for the Merger Agreement?
A:	Yes. A number of risk factors that you should consider carefully are set forth under the heading of “RISK FACTORS,” beginning on page 14.

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RISK FACTORS

       If the merger is consummated and you are an SHB shareholder, you will receive shares of First Citizens common stock in exchange for your shares of SHB common stock and you will receive shares of First Citizens Class A common stock in exchange for your shares of SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock. An investment in First Citizens common stock is subject to a number of risks and uncertainties. Risks and uncertainties relating to general economic conditions are not summarized below. However, First Citizens and SHB believe that there are a number of other risks and uncertainties relating to First Citizens that you should consider in deciding how to vote on the Merger Agreement in addition to the risks and uncertainties associated with financial institutions generally. Many of these risks and uncertainties could affect First Citizens’ future financial results and may cause First Citizens’ future earnings and financial condition to be less favorable than First Citizens’ expectations. There are also a number of risks related to the merger that shareholders of SHB should consider in deciding how to vote on the Merger Agreement. This section summarizes those risks. You should keep these risk factors in mind when you read forward-looking statements in this document. Please refer to the section of this Proxy Statement/Prospectus titled “Cautionary Statement Concerning Forward-Looking Information.”

Risks Related to the Merger

The value of First Citizens shares received may fluctuate; shareholders of SHB may receive more or less value depending on fluctuations in the price of First Citizens stock and, in certain circumstances, downward adjustments to the cash portion of the merger consideration pursuant to certain provisions of the Merger Agreement.

       The number of shares of First Citizens stock issued to SHB shareholders in exchange for each share of SHB stock is fixed. The market values of First Citizens stock and SHB stock at the time the merger is completed may vary from their market values at the date the Merger Agreement was executed, the date of this document and at the date of the shareholders’ meeting of SHB. Shares of First Citizens stock are not traded on an exchange, and therefore, as of the date of this Proxy Statement/Prospectus, there is no public market for such shares. There is no assurance that shares of First Citizens stock can be sold at a price equal to or greater than the implied per share merger value of $24.50 per SHB share following completion of the merger. See “Risks Related to First Citizens and First Citizens Stock - Lack of Trading Market.” Because the exchange ratio will not be adjusted to reflect any changes in the market value of First Citizens stock, the market value of First Citizens stock issued in the merger may be higher or lower than the value of such shares on earlier dates. If the value of First Citizens stock declines prior to completion of the merger, the value of the merger consideration to be received by SHB’s shareholders will decrease.

       These variations may be the result of various factors, many of which are beyond the control of SHB and First Citizens, including:

• changes in the business, operations or prospects of First Citizens, SHB or the combined company;
   
• governmental and/or litigation developments and/or regulatory considerations;
   
• market assessments as to whether and when the merger will be consummated and the anticipated benefits of the merger;
   
• governmental action affecting the banking and financial industry generally;
   
• market assessments of the potential integration or other costs;
   
• lack of a trading market for First Citizens stock; and
   
• general market and economic conditions.

       The merger may not be completed until a significant period of time has passed after the SHB shareholder meeting. At the time of the shareholder meeting, SHB shareholders will not know the exact value of the First Citizens stock that will be issued in connection with the merger.

       The value of First Citizens stock and SHB stock at the effective time of the merger may vary from their prices on the date the Merger Agreement was executed, the date of this Proxy Statement/Prospectus and the date of the shareholders’ meeting. Because there is no public market for either First Citizens stock or SHB stock, the future market prices of First Citizens stock and SHB stock cannot be guaranteed or predicted. Additionally, if SHB’s minimum net worth at closing (SHB’s total shareholders’ equity, excluding (i) SHB’s Series D Preferred Stock, (ii) accumulated other comprehensive income (loss), (iii) all merger costs if paid or accrued by SHB or any subsidiary of SHB and not reimbursed by SHB prior to the closing date and (iv) any accruals, provisions or charges taken by SHB at the written direction of First Citizens) is less than the required minimum of $22,863,000 set forth in the Merger Agreement, then the cash portion of the merger consideration will be adjusted downward dollar for dollar by the amount of such shortfall. Assuming First Citizens did not elect to exercise its right to terminate the Merger Agreement for breach of the representation of the absence of certain changes or events pursuant to the Merger Agreement if SHB’s closing net worth is significantly less than $22,863,000 at the closing, the per share merger consideration to SHB shareholders could be significantly lower than $24.50 per share. If the closing equity were to drop to as low as $6,777,096.50, then SHB shareholders

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would receive no cash consideration and would receive only First Citizens stock for their SHB stock of 0.2876 shares of First Citizens stock for each share of SHB stock. For additional information on the possibility of a downward adjustment to the cash portion of the merger consideration, see “The Merger Agreement - Terms of the Merger” beginning on Page 63 of this Proxy Statement/Prospectus.

SHB’s shareholders may not receive the form of merger consideration they elect.

       The Merger Agreement contains provisions that are designed to ensure that 50% of the outstanding shares of SHB stock are exchanged for shares of First Citizens stock and the other 50% of the shares of SHB stock are exchanged for cash consideration; provided, however, that the Merger Agreement provides that the stock portion of the merger consideration may be increased to 55%. If elections are made by SHB shareholders that would otherwise result in more or less than 50% of such shares being converted into First Citizens stock, the amount of First Citizens stock that SHB shareholders will have elected to receive upon exchange of their shares will be adjusted so that, in the aggregate, 50% of the shares of SHB stock will be exchanged for the right to receive shares of First Citizens stock and the remaining shares of SHB stock will be exchanged for the right to receive cash. As a result, there is a risk that you will not receive a portion of the merger consideration in the form that you elect, which could result in, among other things, tax consequences that differ from those that would have resulted had you received the form of consideration you elected (including the recognition of gain for U.S. federal income tax purposes with respect to the cash received). If you do not make an election, you will be deemed to have made an election to receive the merger consideration in such combination of cash and/or shares of First Citizens stock as provided for in the Merger Agreement. Further, First Citizens may not issue its stock as merger consideration to residents of any state in which the offering of First Citizens’ stock is not registered or eligible for a claim of exemption from registration. One or more state securities commissions may deny First Citizens’ application for registration or claim of exemption, in which case First Citizens could not sell its stock in the subject jurisdiction.

We may fail to achieve the anticipated benefits of the merger.

       First Citizens and SHB have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.

First Citizens may fail to realize the cost savings estimated for the merger.

       Although First Citizens estimates that it will realize cost savings from the merger when fully phased in, it is possible that the estimates of the potential cost savings could turn out to be incorrect. For example, the combined purchasing power may not be as strong as expected, and therefore the estimated cost savings could be reduced. In addition, unanticipated growth in First Citizens’ business may require First Citizens to continue to operate or maintain some facilities or support functions that are currently expected to be combined or reduced. The cost savings estimates also depend on our ability to combine the businesses of First Citizens and SHB in a manner that permits those costs savings to be realized. If the estimates turn out to be incorrect or First Citizens is not able to combine the two companies successfully, the anticipated cost savings may not be fully realized or realized at all, or may take longer to realize than expected.

The market price of shares of First Citizens stock after the merger may be affected by factors different from those affecting shares of SHB or First Citizens currently.

       The businesses of First Citizens and SHB differ in some respects and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of stock may be affected by factors different from those currently affecting the independent results of operations of each of First Citizens and SHB. For a discussion of the businesses of First Citizens and SHB and of certain factors to consider in connection with those businesses, see “INFORMATION ABOUT FIRST CITIZENS” and “INFORMATION ABOUT SHB” beginning on pages 75 and 123, respectively.

The executive officers and directors of SHB have interests different from typical SHB shareholders.

       The executive officers and directors of SHB have certain interests in the merger and participate in certain arrangements that are different from, or are in addition to, those of SHB shareholders generally. See “THE MERGER – Interests of Certain Persons in the Merger.” As a result, these executive officers and directors could be more likely to approve the Merger Agreement than if they did not hold these interests.

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Former shareholders of SHB will be limited in their ability to influence First Citizens’ actions and decisions following the merger.

       Following the merger, former shareholders of SHB will hold less than 9.5 percent of the outstanding shares of First Citizens stock, including only approximately 7 percent of the outstanding voting stock. As a result, former SHB shareholders will have only limited ability to influence First Citizens’ business. Former SHB shareholders will not have separate approval rights with respect to any actions or decisions of First Citizens or, other than Mr. Stewart, have separate representation on First Citizens’ board of directors.

The merger may result in a loss of current SHB employees.

       Despite First Citizens’ efforts to retain quality employees, First Citizens might lose some of SHB’s current employees following the merger. Current SHB employees may not want to work for First Citizens or may not want to assume different duties, positions and compensation that First Citizens offers to the SHB employees. Competitors may recruit employees prior to the merger and during the integration process after the merger. As a result, current employees of SHB could leave with little or no prior notice. First Citizens cannot assure you that the combined companies will be able to attract, retain and integrate employees following the merger.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

       Before the transactions contemplated in the Merger Agreement may be completed, various approvals must be obtained from bank regulatory and other governmental authorities. These governmental entities may impose conditions on the granting of such approvals. Such conditions and the process of obtaining regulatory approvals could have the effect of delaying completion of the merger or of imposing additional costs or limitations on First Citizens following the merger. The regulatory approvals may not be received at any time, may not be received in a timely fashion, and may contain conditions on the completion of the merger that are not anticipated or cannot be met. Although First Citizens and SHB do not currently expect that any such material conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs or limiting the revenues of the combined company following the merger, any of which might have an adverse effect on the combined company following the merger.

The Merger Agreement limits SHB’s ability to pursue an alternative transaction and requires SHB to pay a termination fee plus expenses incurred by First Citizens under certain circumstances relating to alternative acquisition proposals.

       The Merger Agreement prohibits SHB from soliciting, initiating, encouraging or knowingly facilitating certain alternative acquisition proposals with any third party, subject to exceptions set forth in the Merger Agreement. The Merger Agreement also provides for the payment by SHB to First Citizens of a termination fee of $1,000,000 in the event that the Merger Agreement is terminated in certain circumstances, involving, among others, certain changes in the recommendation of SHB’s board of directors. These provisions may discourage a potential competing acquirer that might have an interest in acquiring SHB from considering or proposing such an acquisition. See “THE MERGER AGREEMENT—Termination; Termination Fee” on page 71 of this prospectus/proxy statement.

The fairness opinions obtained by SHB and First Citizens from their respective financial advisors will not reflect changes in circumstances subsequent to the date of the fairness opinions.

       FIG Partners, SHB’s financial advisor in connection with the proposed merger, has delivered to the board of directors of SHB its opinion dated as of March 19, 2014. Olsen Palmer, First Citizens’ financial advisor in connection with the proposed merger, has delivered to the board of directors of First Citizens its opinion dated as of March 19, 2014. Each opinion states that, as of the date of such opinion and based upon and subject to the factors and assumptions set forth therein, the total merger consideration was fair to their respective clients from a financial point of view. The opinions do not reflect changes that may occur or may have occurred after the date of the opinions, including changes to the operations and prospects of First Citizens or SHB, changes in general market and economic conditions or regulatory or other factors. Any such changes, or changes in other factors on which the opinions are based, may materially alter or affect the respective opinions as to the fairness of the total merger consideration to First Citizens and/or SHB.

Failure to complete the merger could cause First Citizens’ or SHB’s stock price to decline.

       If the merger is not completed for any reason, although neither First Citizens nor SHB’s stock trades on an active or liquid market, First Citizens’ or SHB’s stock price may decline because costs related to the merger, such as legal, accounting and certain financial advisory fees, must be paid even if the merger is not completed. In addition, if the merger is not completed, First Citizens’ or SHB’s stock price may decline to the extent that the current market price reflects a market assumption that the merger will be completed or due to questions about why (or whose “fault” it was that) the merger was not completed.

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Risks Related to First Citizens and First Citizens Stock

First Citizens is subject to credit quality risks and First Citizens’ credit policies may not be sufficient to avoid losses.

       First Citizens is subject to the risk of losses resulting from the failure of borrowers, guarantors and related parties to pay interest and principal amounts on loans. Although First Citizens maintains credit policies and credit underwriting, monitoring and collection procedures that management believes are sufficient to manage this risk, these policies and procedures may not prevent losses, particularly during periods in which the local, regional or national economy suffers a general decline. If a large number of borrowers fail to repay their loans, First Citizens’ financial condition and results of operations may be adversely affected.

Earnings could be adversely affected if values of other real estate owned decline.

       First Citizens is subject to the risk of losses from the liquidation and/or valuation adjustments on other real estate owned. First Citizens owns approximately 70 properties totaling $5.8 million in other real estate owned as of June 30, 2014. Other real estate owned is valued at the lower of cost or fair market value less cost to sell. Fair market values are based on independent appraisals for properties valued at $50,000 or greater and appraisals are updated annually. First Citizens may incur future losses on these properties if economic and real estate market conditions result in further declines in the fair market value of these properties.

If First Citizens’ allowance for loan losses becomes inadequate, First Citizens’ financial condition and results of operations could be adversely affected.

       First Citizens maintains an allowance for loan losses that it believes is a reasonable estimate of known and inherent potential losses in its loan portfolio. Management uses various assumptions and judgments to evaluate on a quarterly basis the adequacy of the allowance for loan losses in accordance with GAAP as well as regulatory guidelines. The amount of future losses is susceptible to changes in economic, operating and other conditions, as well as changes in interest rates most of which are beyond First Citizens’ control, and these losses may exceed current estimates. Although First Citizens believes the allowance for loan losses is a reasonable estimate of known and inherent potential losses in its loan portfolio, First Citizens cannot fully predict such potential losses or that its loan loss allowance will be adequate in the future. Excessive loan losses could have an adverse effect on First Citizens’ financial performance.

       Federal and state regulators periodically review First Citizens’ allowance for loan losses and may require First Citizens to increase its provision for loan losses or recognize further loan charge-offs, based on judgments different than those of its management. Any increase in the amount of First Citizens’ provision or loans charged-off as required by these regulatory agencies could have an adverse effect on First Citizens’ results of operations.

Changes in interest rates could have an adverse effect on First Citizens’ earnings.

       First Citizens’ profitability is in part a function of interest rate spread, or the difference between interest rates earned on investments, loans and other interest-earning assets and the interest rates paid on deposits and other interest-bearing liabilities. Interest rates are largely driven by monetary policies set by the Federal Open Market Committee, or FOMC, and trends in the prevailing market rate of interest embodied by the yield curve. The FOMC establishes target rates of interest to influence the cost and availability of capital and promote national economic goals. In January 2012, the FOMC indicated that rates would most likely remain at the historical low of a range of 0.00% to 0.25% through the end of 2014. The yield curve is a representation of the relationship between short-term interest rates to longer-term debt maturity rates. Currently, the yield curve is fairly steep as short-term rates continue at historic lows. As of December 31, 2013, First Citizens National Bank was liability sensitive in terms of interest rate risk exposure, meaning that First Citizens National Bank will likely experience margin compression when federal funds rates increase. In other words, upward pressure on deposit interest rates will outpace increases in the interest rates on interest-earning assets. Deposits are currently priced at historically low levels and are likely to reprice at a faster pace than interest-earning assets when the rate environment begins rising. The majority of variable-rate loans are priced at floors that will require significant increases in federal fund and prime rates before loan yields increase.

       If the rate of interest paid on deposits and other borrowings increases more than the rate of interest earned on loans and other investments, First Citizens’ net interest income and, therefore, earnings could be adversely affected. Earnings could also be adversely affected if the rates on loans and other investments fall more quickly than those on deposits and other borrowings. While management takes measures to guard against interest rate risk, there can be no assurance that such measures will be effective in minimizing the exposure to interest rate risk. A sudden and significant increase in the market rate of interest could have a material adverse effect on the First Citizens’ financial position and earnings.

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First Citizens is an emerging growth company and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make First Citizens’ stock less attractive to investors.

       After filing the registration statement, of which this Proxy Statement/Prospectus is a part, First Citizens will be subject to periodic reporting requirements under the Exchange Act. First Citizens is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), however, and it may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if First Citizens complies with the greater obligations of public companies that are not emerging growth companies immediately after this offering, First Citizens may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as it is an emerging growth company. First Citizens may remain an emerging growth company for up to five years, though First Citizens may cease to be an emerging growth company earlier under certain circumstances, including if, before the end of such five year period, it is deemed to be a large accelerated filer under the SEC rules (which depends on, among other things, having a market value of common stock held by non-affiliates in excess of $700 million) or if First Citizens’ total annual gross revenues equal or exceed $1 billion in a fiscal year. First Citizens cannot predict if investors will find its common stock less attractive because it will rely on these exemptions. If some investors find First Citizens’ common stock less attractive as a result, there may be a less active trading market for First Citizens’ common stock and First Citizens’ stock price may be more volatile.

First Citizens is geographically concentrated in West Tennessee, and changes in local economic conditions may impact its profitability.

       First Citizens operates primarily in West Tennessee and the majority of all loan customers and most deposit and other customers live or have operations in this area. Accordingly, First Citizens’ success depends significantly upon growth in population, income levels, deposits, housing starts and continued attraction of business ventures to this area. First Citizens’ profitability is impacted by changes in general economic conditions in this market. First Citizens is concerned about the impact of plant closings (such as Goodyear and Briggs & Stratton) and their impact to unemployment levels and economic conditions in its rural markets. Additionally, unfavorable local or national economic conditions could reduce First Citizens’ growth rate, affect the ability of its customers to repay their loans and generally affect First Citizens’ financial condition and results of operations.

       First Citizens is less able than larger institutions to spread the risks of unfavorable local economic conditions across a large number of diversified economies. Moreover, First Citizens is unable to give assurance that it will benefit from any market growth or favorable economic conditions in its primary market areas if they do occur.

If financial market conditions worsen or First Citizens’ loan demand increases significantly, First Citizens’ liquidity position could be adversely affected. First Citizens may be required to rely on secondary sources of liquidity to meet withdrawal needs or fund operations, and there can be no assurance that these sources will be sufficient to meet future liquidity demands.

       First Citizens relies on dividends from the First Citizens National Bank as its primary source of funds. First Citizens National Bank’s primary sources of funds are client deposits and loan repayments and from the sale or maturity of securities. While scheduled loan repayments have historically been a relatively stable source of funds, they are susceptible to the inability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, natural disasters and national or international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, regulatory capital requirements, returns available to clients on alternative investments and general economic conditions. Accordingly, First Citizens may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Such sources include Federal Home Loan Bank (“FHLB”) advances, sales of securities and loans, and federal funds lines of credit from correspondent banks, as well as out-of-market time deposits. While First Citizens believes that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity demands, particularly if First Citizens continues to grow and experience increasing loan demand. First Citizens may be required to slow or discontinue loan growth, capital expenditures or other investments or liquidate assets should such sources not be adequate.

Market conditions could adversely affect First Citizens’ ability to obtain additional capital on favorable terms should it need it.

       First Citizens’ business strategy calls for continued growth. First Citizens anticipates that it will be able to support this growth through the generation of additional deposits at new branch locations, as well as through returns realized as a result of investment opportunities. However, First Citizens may need to raise additional capital in the future to support continued growth and maintain adequate capital levels. First Citizens may not be able to obtain additional capital in the amounts or on terms satisfactory to it. Growth may be constrained if First Citizens is unable to raise additional capital as needed.

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Failure to remain competitive in an increasingly competitive industry may adversely affect results of operations and financial condition.

       First Citizens encounters strong competition from other financial institutions in its market areas. In addition, established financial institutions not already operating in First Citizens’ market areas may open branches in its market areas at future dates or may compete in the market via the internet. Certain aspects of First Citizens’ banking business also compete with savings institutions, credit unions, mortgage banking companies, consumer finance companies, insurance companies and other institutions, some of which are not subject to the same degree of regulation or restrictions imposed on First Citizens. Many of these competitors have substantially greater resources and lending limits and are able to offer services that First Citizens does not provide. While First Citizens believes that it competes effectively with these other financial institutions in its market areas, First Citizens may face a competitive disadvantage as a result of its smaller size, smaller asset base, lack of geographic diversification and inability to spread its marketing costs across a broader market. If First Citizens has to raise interest rates paid on deposits or lower interest rates charged on loans to compete effectively, First Citizens’ net interest margin and income could be negatively affected. Failure to compete effectively to attract new or to retain existing clients may reduce or limit First Citizens’ margins and its market share and may adversely affect First Citizens’ results of operations and financial condition.

First Citizens and its subsidiaries are subject to extensive government regulation and supervision. Changes in laws, government regulation and monetary policy may have a material adverse effect on our results of operations.

       First Citizens and its subsidiaries are subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not First Citizens’ shareholders. These regulations affect First Citizens’ lending practices, capital structure, investment practices and dividend policy and growth, among other things. Future changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect First Citizens in substantial and unpredictable ways. Such changes could subject First Citizens to additional costs, limit the types of financial services and products First Citizens may offer and/or increase the ability of non-banks to offer competing financial services and products, or decrease the flexibility in pricing certain products and services by First Citizens National Bank, among other things. Failure to comply with laws, regulations or policies could result in sanctions imposed by regulatory agencies, civil money penalties, civil liability and/or reputation damage, which could have a material adverse effect on First Citizens’ financial condition and results of operations. While First Citizens’ policies and procedures are designed to deter and detect any such violations, there can be no assurance that such violations will not occur.

First Citizens stock is not listed or traded on any established securities market and is normally less liquid than most securities traded in those markets; First Citizens anticipates filing to revert to non-reporting status following the merger.

       First Citizens stock is not listed or traded on any established securities exchange or market and First Citizens has no plans to seek to list its stock on any recognized exchange or qualify it for trading in any market. Accordingly, First Citizens stock has substantially fewer trades than the average securities listed on any national securities exchange. Most transactions in First Citizens stock are privately negotiated trades and its stock is very thinly traded. There is no dealer for First Citizens stock and no “market maker.” First Citizens’ shares do not have a trading symbol. The lack of a liquid market can produce downward pressure on First Citizens stock price and can reduce the marketability of First Citizens stock.

       If First Citizens’ registration statement on Form S-4 becomes effective under the Securities Act, First Citizens will be required to file with the SEC the periodic and current reports required by the Securities Exchange Act and related rules and regulations. It is the intent of First Citizens’ management, and the merger consideration has been structured to permit First Citizens’ management, to apply to the SEC in 2015 to “go dark” so as not to continue being required to comply with these filing requirements. If First Citizens is eligible to discontinue SEC filings, SHB shareholders who receive First Citizens’ stock in the merger will have access to less information about the financial condition and results of operations of First Citizens than would be the case if SEC filings were continued.

First Citizens’ ability to pay dividends may be limited.

       As a holding company, First Citizens is a separate legal entity from First Citizens National Bank and does not conduct significant income-generating operations of its own. It currently depends upon First Citizens National Bank’s cash and liquidity to pay dividends to its shareholders. First Citizens cannot provide assurance that First Citizens National Bank will have the capacity to pay dividends to First Citizens in the future. Various statutes and regulations limit the availability of dividends from First Citizens National Bank. It is possible that, depending upon First Citizens National Bank’s financial condition and other factors, First Citizens National Bank’s regulators could assert that payment of dividends by First Citizens National Bank to First Citizens is an unsafe or unsound practice. In the event that First Citizens National Bank is unable to pay dividends to First Citizens, First Citizens may not be able to pay dividends to its shareholders.

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A failure or breach of First Citizens’ operational or security systems or infrastructure, or those of First Citizens’ third party vendors and other service providers or other third parties, including as a result of cyber-attacks, could disrupt First Citizens’ businesses, result in the disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs, and cause losses.

       First Citizens relies heavily on communications and information systems to conduct its business. Information security risks for financial institutions such as First Citizens have generally increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, and terrorists, activists, and other external parties. As customer, public, and regulatory expectations regarding operational and information security have increased, First Citizens’ operating systems and infrastructure must continue to be safeguarded and monitored for potential failures, disruptions, and breakdowns. First Citizens’ business, financial, accounting, and data processing systems, or other operating systems and facilities, may stop operating properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially beyond First Citizens’ control. For example, there could be electrical or telecommunication outages; natural disasters such as earthquakes, tornadoes, and hurricanes; disease pandemics; events arising from local or larger scale political or social matters, including terrorist acts; and as described below, cyber-attacks.

       As noted above, First Citizens’ business relies on its digital technologies, computer and email systems, software and networks to conduct its operations. Although First Citizens has information security procedures and controls in place, First Citizens’ technologies, systems and networks and its customers’ devices may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of First Citizens’ or its customers’ or other third parties’ confidential information. Third parties with whom First Citizens does business or that facilitate First Citizens’ business activities, including financial intermediaries, or vendors that provide service or security solutions for First Citizens’ operations, and other unaffiliated third parties, could also be sources of operational and information security risk to First Citizens, including from breakdowns or failures of their own systems or capacity constraints.

       While First Citizens has disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. First Citizens’ risk and exposure to these matters remain heightened because of the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of First Citizens’ controls, processes, and practices designed to protect its systems, computers, software, data, and networks from attack, damage or unauthorized access remain a focus for First Citizens. As threats continue to evolve, First Citizens may be required to expend additional resources to continue to modify or enhance its protective measures or to investigate and remediate information security vulnerabilities. Disruptions or failures in the physical infrastructure or operating systems that support First Citizens’ businesses and clients, or cyber-attacks or security breaches of the networks, systems or devices that First Citizens’ clients use to access First Citizens’ products and services could result in client attrition, regulatory fines, penalties or intervention, reputation damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could have a material effect on First Citizens’ results of operations or financial condition.

Shares of First Citizens stock are not insured.

       Shares of First Citizens stock are not deposits and are not insured by the Federal Deposit Insurance Corporation (the “FDIC”) or any other entity.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF FIRST CITIZENS

       The following table sets forth selected consolidated historical financial data of First Citizens. The selected consolidated historical financial data as of and for each of the two years ended December 31, 2013 and 2012 is derived from First Citizens’ audited financial statements. The selected consolidated historical financial data as of and for each of the six-month periods ended June 30, 2014 and 2013 is derived from First Citizens’ unaudited financial statements for those periods. You should not assume that the results of operations for past periods and for any interim period indicate results for any future period. You should read this information in conjunction with First Citizens’ consolidated financial statements and related notes included in this Proxy Statement/Prospectus beginning on Page F-3.

	For the Six			For the Six			For the			For the
	Months Ended			Months Ended			Year Ended			Year Ended
	June 30, 20141			June 30, 20131			December 31, 20132			December 31, 20122
Earnings Summary:	(Dollars in thousands, except per share amounts)
Interest revenue	$	22,297		$	22,034		$	44,122		$	44,111
Interest expense		2,936			3,161			6,214			7,377
Net interest revenue		19,361			18,873			37,908			36,734
Provision for credit losses		375			525			775			650
Net interest revenue, after
provision for credit losses		18,986			18,348			37,133			36,084
Noninterest revenue		7,558			6,901			14,030			12,454
Noninterest expense		17,038			16,378			33,341			31,017
Income before income taxes		9,506			8,871			17,822			17,521
Income tax expense		2,248			2,109			4,014			4,006
Net income	$	7,258		$	6,762		$	13,808		$	13,515
Balance Sheet – End of
Period Balances:
Total assets	$	1,199,609		$	1,181,378		$	1,174,472		$	1,178,325
Total securities		446,907			435,408			456,525			466,419
Loans and leases, net of
unearned income		611,233			585,131			580,236			549,452
Total deposits		967,173			941,988			968,530			964,839
Long-term debt		54,611			59,348			51,167			48,719
Total equity		122,005			110,246			112,606			114,140
Balance Sheet - Average Balances:
Total assets		1,185,554			1,164,311			1,165,215			1,083,182
Total securities		459,840			471,382			452,938			399,386
Loans and leases, net of
unearned income		596,337			565,217			575,367			536,180
Total deposits		969,619			946,125			947,319			875,945
Long-term debt		51,710			56,165			56,407			49,042
Total equity		118,561			116,295			114,489			110,656
Common Share Data:
Basic earnings per share	$	2.01		$	1.87		$	3.83		$	3.75
Diluted earnings per share		2.01			1.87			3.83			3.75
Cash dividends per share		0.50			0.50			1.30			1.20
Book value per share		33.82			30.56			31.21			31.64
Tangible book value per share		28.93			26.27			27.43			24.89
Dividend payout ratio		24.88%			26.73%			33.94%			32.00%

____________________
 

1	Derived from unaudited financial statements.
2	Derived from audited financial statements.

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	For the Six Months Ended		For the Six Months Ended		For the Year Ended		For the Year Ended
	June 30, 20141		June 30, 20131		December 31, 20132		December 31, 20122
Financial Ratios:
Return on average assets	1.23%		1.17%		1.19%		1.25%
Return on average
shareholders’ equity	12.34%		11.73%		12.06%		12.21%
Total shareholders’ equity to
total assets	10.17%		9.51%		9.57%		9.69%
Tangible shareholders’ equity to
tangible assets	8.80%		8.28%		8.53%		7.71%
Net interest margin-fully taxable
equivalent	3.86%		3.80%		3.83%		4.01%
Credit Quality Ratios:
Net charge-offs to average loans
and leases	0.06%		0.11%		0.16%		0.14%
Provision for credit losses to
average loans and leases	0.06%		0.09%		0.13%		0.12%
Allowance for credit losses to net
loans and leases	1.28%		1.33%		1.35%		1.45%
Allowance for credit losses to
non-performing loans	94.85%		74.21%		91.63%		89.25%
Allowance for credit losses to
non-performing assets	55.82%		41.61%		50.91%		44.44%
Non-performing loans to
net loans and leases	1.35%		1.80%		1.47%		1.62%
Non-performing assets to
net loans and leases	2.29%		3.21%		2.65%		3.26%
Capital Ratios:
Tier 1 capital	16.77%		15.96%		16.41%		15.86%
Total capital	17.91%		17.16%		17.58%		17.12%
Tier 1 leverage capital	9.78%		9.11%		9.40%		9.17%

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF SHB

       The following table sets forth selected consolidated historical financial data of SHB. The selected consolidated historical financial data as of and for each of the two years ended December 31, 2013 and 2012 is derived from SHB’s audited financial statements. The selected consolidated historical financial data as of and for each of the six-month periods ended June 30, 2014 and 2013 is derived from SHB’s unaudited financial statements for those periods. You should not assume that the results of operations for past periods and for any interim period indicate results for any future period. You should read this information in conjunction with SHB’s consolidated financial statements and related notes included in this Proxy Statement/Prospectus beginning on Page F-64.

	For the Six			For the Six			For the			For the
	Months Ended			Months Ended			Year Ended			Year Ended
	June 30, 20141			June 30, 20131			December 31, 20132			December 31, 20122
Earnings Summary:	(Dollars in thousands, except per share amounts)
Interest revenue	$	4,383		$	4,714		$	9,287		$	9,492
Interest expense		566			631			1,202			1,499
Net interest revenue		3,817			4,083			8,085			7,993
Provision for credit losses		77			2			124			980
Net interest revenue, after
provision for credit losses		3,740			4,081			7,961			7,013
Noninterest revenue		1,487			1,584			2,776			3,993
Noninterest expense		3,551			3,546			7,166			7,317
Income before income taxes		1,676			2,119			3,571			3,689
Income tax expense		402			607			846			1,030
Net income	$	1,274		$	1,512		$	2,725		$	2,659
Balance Sheet – End of
Period Balances:
Total assets	$	243,547		$	238,531		$	237,078		$	242,822
Total securities		78,155			65,906			68,966			57,340
Loans and leases, net of
unearned income		131,457			142,307			136,034			149,288
Total deposits		209,008			207,968			205,345			208,486
Long-term debt		5,155			5,155			5,155			5,155
Total equity		27,698			24,357			25,184			26,002
Balance Sheet - Average Balances:
Total assets		240,313			240,677			239,014			228,540
Total securities		75,183			62,882			64,399			59,993
Loans and leases, net of
unearned income		132,987			147,108			142,062			141,366
Total deposits		210,181			208,114			206,522			196,738
Long-term debt		5,155			5,155			5,155			5,155
Total equity		26,441			25,180			25,593			24,902
Common Share Data:
Basic earnings per share	$	0.97		$	1.18		$	2.10		$	2.00
Diluted earnings per share		0.97			1.18			2.10			2.00
Cash dividends per share		0.42			0.41			0.41			0.31
Book value per share		17.63			15.24			15.67			16.55
Tangible book value per share		18.01			16.53			17.45			15.77
Dividend payout ratio		42.59%			35.26%			19.60%			15.63%

____________________
 

1		Derived from unaudited financial statements.
2		Derived from audited financial statements.

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		For the Six		For the Six		For the		For the
		Months Ended		Months Ended		Year Ended		Year Ended
		June 30, 20141		June 30, 20131		December 31, 20132		December 31, 20122
Financial Ratios:
Return on average assets		1.05%		1.25%		1.12%		1.10%
Return on average
shareholders’ equity		9.53%		11.90%		10.44%		10.12%
Total shareholders’ equity to
total assets		11.37%		10.21%		10.62%		10.71%
Tangible shareholders’ equity to
tangible assets		9.48%		8.75%		9.43%		8.20%
Net interest margin-fully taxable
equivalent		3.73%		4.10%		4.07%		4.13%
Credit Quality Ratios:
Net charge-offs/(recoveries) to
average loans and leases		0.03%		0.08%		0.30%		0.92%
Provision for credit losses to
average loans and leases		0.12%		0.00%		0.09%		0.69%
Allowance for credit losses to
net loans and leases		1.54%		1.56%		1.45%		1.52%
Allowance for credit losses to
non-performing loans		73.43%		156.64%		198.89%		152.48%
Allowance for credit losses to
non-performing assets		64.26%		71.34%		88.60%		90.92%
Non-performing loans to
net loans and leases		2.10%		1.00%		0.73%		1.00%
Non-performing assets to
net loans and leases		2.39%		2.18%		1.63%		1.67%
Capital Ratios:
Tier 1 capital		21.68%		19.44%		20.61%		18.35%
Total capital		20.43%		18.19%		19.46%		17.10%
Tier 1 leverage capital		13.42%		12.76%		13.60%		12.74%

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UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

       The following unaudited pro forma combined consolidated financial information and accompanying notes show the impact on the historical financial condition and results of operations of First Citizens and SHB and have been prepared to illustrate the effects of the merger under the acquisition method of accounting. See “THE MERGER - Accounting Treatment.”

       The unaudited pro forma combined consolidated balance sheet as of June 30, 2014 is presented as if the merger had occurred on June 30, 2014. The unaudited pro forma combined consolidated income statements for the year ended December 31, 2013 and the six months ended June 30, 2014 are presented as if the merger had occurred on January 1, 2013. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the income statements only, expected to have a continuing impact on consolidated results of operations.

       The selected unaudited pro forma combined consolidated financial statements are provided for informational purposes only. The unaudited pro forma combined consolidated financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the merger been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma combined consolidated financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined consolidated financial statements should be read together with:

• the accompanying notes to the unaudited pro forma combined consolidated financial statements;
   
• First Citizens’ audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2013, included beginning on Page F-3 in this Proxy Statement/Prospectus;
   
• SHB’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2013, included beginning on Page F-64 elsewhere in this Proxy Statement/Prospectus;
   
• First Citizens’ unaudited condensed consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2014, included beginning on Page F-42 in this Proxy Statement/Prospectus;
   
• SHB’s unaudited consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2014, included beginning on Page F-93 in this Proxy Statement/Prospectus; and
   
• other information pertaining to First Citizens and SHB included elsewhere in this Proxy Statement/Prospectus.

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FIRST CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
JUNE 30, 2014
(all amounts are in thousands, except per share data, unless otherwise indicated)

	First Citizens			Southern Heritage
	Bancshares, Inc.			Bancshares, Inc.			Redemption of				Purchase								Pro Forma
	6/30/2014			6/30/2014			Series D Preferred				Accounting				Pro Forma				6/30/2014
	(as reported)			(as reported)			Stock (SBLF)				Adjustments				Adjustments				Combined
Cash and cash equivalents	$	26,343		$	25,275		$	(5,105)	(a)		$	(2,087)	(b)		$	(1,000)	(p)		$	43,426
Interest bearing deposits in banks		23,523			101															23,624
Available-for-sale investment
securities		446,907			78,155															525,062
Loans, net of unearned income		611,233			131,457							(5,131)	(c)							737,559
Allowance for loan losses		(7,807)			(2,023)							2,023	(d)							(7,807)
Net loans		603,426			129,434							(3,108)								729,752
Mortgage loans held for sale		3,734			2,608															6,342
Premises and equipment		35,007			4,021							1,300	(e)							40,328
Other real estate owned		5,755			393							–	(f)							6,148
Goodwill		13,651			–							9,928	(g)							23,579
Other intangible assets		362			–							1,561	(h)							1,923
Other assets		40,901			3,560															44,461
Total assets	$	1,199,609		$	243,547		$	(5,105)			$	7,594			$	(1,000)			$	1,444,645
Deposits:
Non-interest bearing	$	136,950		$	31,740														$	168,690
Interest bearing		830,223			177,268							452	(j)							1,007,943
Total deposits		967,173			209,008			–				452				–				1,176,633
Borrowings		103,685			5,155							10,450	(k)							119,290
Other liabilities		6,746			1,686							290	(i)			(340)	(p)			8,382
Total liabilities		1,077,604			215,849			–				11,192				(340)				1,304,305
Equity
Preferred stock		–			5,105			(5,105)	(a)											–
Common Stock		3,718			1,281							(1,281)	(l)							3,718
Surplus		15,331			16,426							569	(l)							32,326
Retained earnings		100,344			5,372							(5,372)	(l)			(660)	(p)			99,684
Accumulated other
comprehensive income		3,631			(486)							486	(n)							3,631
Treasury stock, at cost		(3,074)			–															(3,074)
Total shareholders’ equity		119,950			27,698			(5,105)				(5,598)				(660)				136,285
Non-controlling (minority)
interest in consolidated
subsidiary		2,055			–							2,000	(m)							4,055
Total shareholders’ equity		122,005			27,698			(5,105)				(3,598)				(660)				140,340
Total liabilities and
shareholders’ equity	$	1,199,609		$	243,547		$	(5,105)			$	7,594			$	(1,000)			$	1,444,645
Basic common shares
outstanding		3,607			1,282							(904)	(o)							3,985
Book value per basic
common share outstanding	$	33.82		$	17.63														$	35.22

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FIRST CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 2013
(all amounts are in thousands, except per share data, unless otherwise indicated)

	First Citizens			Southern Heritage
	Bancshares, Inc.			Bancshares, Inc.							Pro Forma
	12/31/2013			12/31/2013			Pro Forma				Combined
	(as reported)			(as reported)			Adjustments				12/31/2013
Interest Income:
Interest and fees on loans	$	32,156		$	7,450		$	421	(c)		$	40,027
Interest income on securities		11,865			1,823			169	(n)			13,857
Other interest income		101			14							115
Total interest income		44,122			9,287			590				53,999
Interest expense:
Interest expense on deposits		4,829			1,080			(226)	(j)			5,683
Interest expense on borrowings		1,385			122			517	(k)			2,024
Total interest expense		6,214			1,202			291				7,707
Net interest income		37,908			8,085			299				46,292
Provision for loan losses		775			124							899
Net interest income after provision		37,133			7,961			299				45,393
Non-interest income:
Mortgage banking income		1,445			1,452							2,897
Service charges on deposit accounts		4,798			487							5,285
Gain on sale of securities		1,256			164							1,420
Other non-interest income		6,531			621							7,152
Total non-interest income		14,030			2,724							16,754
Non-interest expense:
Salaries and employee benefits		18,906			3,896							22,802
Net occupancy and depreciation expense		3,681			360			28	(e)			4,069
Amortization of intangibles		42						156	(h)			198
Other non-interest expense		10,712			2,858			120	(m)			13,690
Total non-interest expense		33,341			7,114			304				40,759
Net income before income taxes		17,822			3,571			(5)				21,388
Income tax expense		4,014			846			(2)	(q)			4,858
Net income	$	13,808		$	2,725		$	(3)			$	16,530
Preferred stock dividends		–			52			(52)				–
Net income available to common shareholders	$	13,808		$	2,673		$	49			$	16,530
Earnings per common share	$	3.83		$	0.97						$	4.15
Weighted average common shares outstanding		3,607			1,272							3,985

27

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FIRST CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30, 2014
(all amounts are in thousands, except per share data, unless otherwise indicated)

	First Citizens			Southern Heritage
	Bancshares, Inc.			Bancshares, Inc.							Pro Forma
	6/30/2014			6/30/2014			Pro Forma				Combined
	(as reported)			(as reported)			Adjustments				6/30/2014
Interest Income:
Interest and fees on loans	$	16,026		$	3,296		$	210	(c)		$	19,532
Interest income on securities		6,234			1,066			84	(n)			7,384
Other interest income		37			21							58
Total interest income		22,297			4,383			294				26,974
Interest expense:
Interest expense on deposits		2,325			506			(114)	(j)			2,717
Interest expense on borrowings		611			60			260	(k)			931
Total interest expense		2,936			566			146				3,648
Net interest income		19,361			3,817			148				23,326
Provision for loan losses		375			77							452
Net interest income after provision		18,986			3,740			148				22,874
Non-interest income:
Mortgage banking income		507			558							1,065
Service charges on deposit accounts		2,244			217							2,461
Gain on sale of securities		1,291			326							1,617
Other non-interest income		3,516			386							3,902
Total non-interest income		7,558			1,487			–				9,045
Non-interest expense:
Salaries and employee benefits		9,791			1,882							11,673
Net occupancy and depreciation expense		1,862			171							2,033
Amortization of intangibles		21			–			78	(h)			99
Other non-interest expense		5,364			1,498			60	(m)			6,922
Total non-interest expense		17,038			3,551			138				20,727
Net income before income taxes		9,506			1,676			10				11,192
Income tax expense		2,248			402			3	(q)			2,653
Net income	$	7,258		$	1,274		$	7			$	8,539
Preferred stock dividends		–			(25)			25				–
Net income available to common shareholders	$	7,258		$	1,249		$	32			$	8,539
Earnings per common share	$	2.01		$	0.99						$	2.14
Weighted average common shares outstanding		3,607			1,282							3,985

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NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(all amounts are in thousands, except per share data, unless otherwise indicated)

Note 1 – Basis of Pro Forma Presentation

       The unaudited pro forma combined consolidated balance sheet as of June 30, 2014 and the unaudited pro forma combined consolidated income statements for the year ended December 31, 2013 and six months ended June 30, 2014 are based on the historical financial statements of First Citizens and SHB after giving effect to the completion of the merger and the assumptions and adjustments described in the accompanying notes. The unaudited pro forma combined consolidated balance sheet as of June 30, 2014 gives effect to the merger as if it occurred on that date. The unaudited pro forma combined consolidated income statements for the year ended December 31, 2013 and six months ended June 30, 2014 gives effect to the merger as if it occurred on January 1, 2013. Such financial statements do not reflect any cost savings or operating synergies which may occur subsequent to the merger, or the cost to achieve such cost savings or operating synergies or any anticipated disposition of assets which may result from integration of the operations of the two companies. The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the combined results of operation or financial position that might have been achieved for the period indicated, nor is it necessarily indicative of the future results of the combined company. Certain historical financial information has been reclassified to conform to the current presentation.

       The transaction will be accounted for under the acquisition method of accounting in accordance with the Accounting Standard Codification (“ASC”) Topic 805, Business Combinations (ASC 805). Under ASC 805, all of the assets acquired and liabilities assumed in a business combinations are recognized at their acquisition-date fair values, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the purchase price over the fair value of assets acquired and liabilities assumed, if any, net of deferred tax allocations, is recorded to goodwill.

       The actual amounts recorded as of the completion of the merger may differ materially from the information presented in these unaudited pro forma combined financial statements as a result of:

• changes in the fair values of SHB’s assets and liabilities;
   
• changes used or generated in SHB’s operations between signing of the merger agreement and completion of the merger;
   
• other changes in SHB’s net assets that occur prior to completion of the merger; and
   
• actual financial results of the combined company.

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Note 2 – Pro Forma Allocation of Purchase Price

       The following table shows the pro forma allocation of purchase price to net assets acquired and the pro forma goodwill generated from the transaction:

Purchase Price:
SHB shares outstanding as of June 30, 2014 (less SBLF shares)		1,313,135
Fixed exchange ratio		0.2876
First Citizens shares to be issued for SHB shares		377,658
Price per share based on First Citizens as of July 31, 2014	$	45.00
Aggregate pro forma value of First Citizens stock to be issued	$	16,995
Aggregate cash consideration at $12.25 per SHB share		16,087
Total pro forma purchase price				$	33,082
Net assets acquired:
Cash and cash equivalents		20,170
Interest bearing deposits in banks		101
Available-for-sale investment securities		78,155
Loans, net of unearned income		126,326
Mortgage loans held for sale		2,608
Premises and equipment		5,321
Other real estate owned		393
Other intangible assets		1,561
Other assets		3,560
Total assets		238,195
Non-interest bearing deposits		31,740
Interest bearing deposits		177,720
Total deposits		209,460
Borrowings		3,605
Other liabilities		1,976
Total liabilities		215,041
Net assets acquired					23,154
Goodwill				$	9,928

Note 3 – Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments

       The following preliminary unaudited pro forma adjustments have been reflected in the unaudited condensed combined financial information. All adjustments are based on current valuations and assumptions which are subject to change. The descriptions related to these preliminary adjustments are as follows (in thousands):

(a)	Redemption of SHB’s Series D Preferred Stock-Cash and shareholders’ equity were adjusted for the redemption of SHB’s Series D preferred stock issued through the Small Business Lending Fund (SBLF). This redemption of $5,105 is expected to occur prior to closing at par value with no discount or premium.
(b)	Purchase Accounting Adjustments-Adjustments to cash consist of the net cash consideration of $12.25 per share which aggregates to cash out flow of $16,087 and net cash inflow from issuance of line of credit of $12,000 at the holding company level of First Citizens and issuance of REIT preferred stock of $2,000. (See also note (m) below).
(c)	Purchase Accounting Adjustments-Based on First Citizens’ initial evaluation of the acquired portfolio of loans, a fair value adjustment of $5,131 was recorded which includes both an interest rate component and a credit component. The interest rate component totaled approximately $631 and will be amortized over the remaining estimated life of the loan portfolio. The impact of the adjustment was an increase to interest income by approximately $421 and $210 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(d)	Purchase Accounting Adjustments-The allowance for loan losses was adjusted to reflect the reversal of SHB’s recorded allowance. Purchased loans acquired in a business combination are required to be recorded at fair value, and the recorded allowance for loan losses may not be carried over. While First Citizens anticipates significantly reducing the provision for loan losses as a result of the acquired loans being recorded at fair value, no adjustment to the historic amounts of SHB’s provision has been recorded in the Pro Forma Combined Condensed Consolidated Income Statements.

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(e)	Purchase Accounting Adjustments-Fair value adjustment to the net book value of property held by SHB is $1,300 based on First Citizens’ initial evaluation of comparable sales and other relevant market information obtained from an independent third party. Of this adjustment, $1,100 is allocated to buildings and will be amortized over estimated useful life of 39 years. The impact of the adjustment was an increase in depreciation expense of $28 and $12 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(f)	Purchase Accounting Adjustments-Based on First Citizens’ initial evaluation of the acquired portfolio, no adjustment is recognized to SHB’s other real estate owned and thus, has no impact on the Pro Forma Combined Condensed Consolidated Income Statements.
(g)	Purchase Accounting Adjustments-Goodwill of $9,928 was generated as a result of the total purchase price and net assets acquired. See Note 2, “Pro Forma Allocation of Purchase Price,” for the allocation of the purchase price to net assets acquired. The adjustment has no impact on the Pro Forma Combined Condensed Consolidated Income Statements.
(h)	Purchase Accounting Adjustments-Based on First Citizens’ initial evaluation of core deposits, the identified core deposit intangible of $1,561 will be amortized on a straight line basis over an estimated useful life of 10 years. The amortization expense associated with the core deposit intangible was an increase to non-interest expense of $156 and $78 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(i)	Purchase Accounting Adjustments-The adjustment of approximately $290 reflects deferred taxes associated with the adjustments to record the assets and liabilities of SHB at fair value using First Citizens statutory rate of 34%.
(j)	Purchase Accounting Adjustments-A fair value adjustment of $452 is recorded to fixed-rate deposit liabilities based on current rates offered by First Citizens for similar instruments. The adjustment will be recognized over the estimated remaining term of related deposit liabilities. The impact of the adjustment was to decrease deposit interest expense by $226 and $114 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(k)	Purchase Accounting Adjustments-A fair value adjustment of $1,550 was recorded as a decrease to SHB’s outstanding long-term debt which consists of subordinated debentures totaling $5,155. This adjustment will be recognized over the estimated expected life of the long-term debt instruments. The impact of the adjustment was to increase interest expense on borrowings by $154 and $78 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
	An increase of $12,000 to borrowings is reflected to account for the line of credit to be issued at the holding company level of First Citizens. The proceeds from the line of credit will be used as a funding source for the $12.25 per share ($16,087 aggregate) cash consideration. The line of credit will carry a five-year term consist of $6,000 floating rate at 90-day LIBOR plus 200 basis points and $6,000 fixed rate at 3.76%. Quarterly payments of principal and interest will be required based on a 10-year amortization. The impact of the adjustment was to increase interest expense on borrowings by $363 and $182 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(l)	Purchase Accounting Adjustments-Common stock, surplus and retained earnings were adjusted to reverse SHB’s historical shareholders’ equity balances and to reflect the stock consideration to be issued estimated at $16,995. See also Note 2, “Pro Forma Allocation of Purchase Price,” for the allocation of the purchase price to net assets acquired. The adjustment has no impact on the Pro Forma Combined Condensed Consolidated Income Statements.
(m)	Purchase Accounting Adjustments-Adjustment to reflect issuance of $2,000 of non-cumulative perpetual preferred stock by First Citizens Properties, Inc., the real estate investment trust subsidiary of First Citizens. This issuance of stock is expected to be completed by the closing of the transaction, subject to regulatory approval, through a private placement offering. Proceeds from the offering will be used as funding source for the cash consideration of $12.25 per share ($16,087 aggregate). The impact of the adjustment was to increase non-interest expense for the minority interest dividend payments by $120 and $60 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(n)	Purchase Accounting Adjustments-Accumulated other comprehensive income was adjusted to reverse SHB’s historical accumulated other comprehensive income balance. The net discount of $486 recorded to reflect the excess of the par value over the fair value of the acquired investment securities will be recognized over the estimated remaining life of the portfolio. The impact of the adjustment was to increase interest income on securities by $169 and $84 for the year ended December 31, 2013 and six months ended June 30, 2014, respectively.
(o)	Purchase Accounting Adjustments-Weighted average basic shares outstanding were adjusted to reverse SHB’s basic shares outstanding and to record shares of First Citizens stock issued to effect the transaction.

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(p)	Pro Forma Adjustments-Cash was adjusted to reflect expensing of approximately $1,000 of anticipated non-recurring merger related expenses to be incurred by First Citizens and SHB prior to and at closing. The related tax effect of approximately $340 is reflected as a decrease to Other Liabilities for the reduction of current and deferred tax liabilities and the expense net of tax of approximately $660 is reflected as a decrease to retained earnings. Anticipated non-recurring merger related expenses consist of investment banking fees, legal fees, accounting fees, registration fees, contract termination fees, printing costs, etc. These expenses are not included in the Pro Forma Combined Condensed Consolidated Income Statements because they are not expected to have a continuing impact on the combined entity. Payment of these expenses is not expected to have a significant impact on the liquidity of the combined entity.
(q)	Pro Forma Adjustments-Income taxes were adjusted to reflect the tax effects of the purchase accounting adjustments using First Citizens’ statutory rate of 34%.

Note 4 – Preliminary Unaudited Pro Forma Regulatory and Tangible Capital Ratios

       The following information reflects the unaudited pro forma balances used for calculating pro forma regulatory and tangible capital ratios as of June 30, 2014 for First Citizens, First Citizens National Bank and Southern Heritage Bank and gives effect to the merger as if it occurred on that date.

First Citizens Bancshares, Inc.

	June 30, 2014
	(as reported)(1)			Adjustments				Pro Forma
Total equity (before minority interests)	$	119,950		$	16,995	(2)		$	136,945
Less:
Net unrealized gain on available-for-sale debt securities		3,631							3,631
Disallowed goodwill & intangibles		14,013			10,958	(3)			24,971
Add qualifying restricted core capital elements:
Trust preferred debt		10,310			3,605	(4)			13,915
Noncontrolling minority interests		2,000			2,000	(5)			4,000
Tier 1 capital (total tangible equity capital)		114,616			11,642				126,258
Reserve for loan losses		7,807							7,807
Unrealized gains on available-for-sale equity securities		19							19
Tier 2 capital		7,826							7,826
Total qualified capital		122,442			11,642				134,084
Risk weighted assets		683,550			152,737	(6)			836,287
Total average assets		1,186,149			247,545	(7)			1,433,694
Less: disallowed goodwill and intangibles		14,013			10,958	(3)			24,971
Average assets for regulatory leverage capital		1,172,136			236,587				1,408,723
Total assets		1,199,609			245,036	(8)			1,444,645
Total tangible assets		1,185,596			234,078	(9)			1,419,674
Tier 1 leverage ratio(10)		9.78%							8.96%
Tier 1 risk based capital ratio(11)		16,77%							15.10%
Total risk based capital ratio(12)		17.91%							16.03%
Total tangible equity capital to total tangible assets		9.67%							8.89%

____________________
 

(1)		Balances as of June 30, 2014 as reported on First Citizens FRY-9C filed with the Federal Reserve.
(2)		Adjustment to reflect stock consideration to effect the transaction. See also Note 2, “Pro Forma Allocation of Purchase Price.”
(3)		Adjustment to reflect preliminary estimate of goodwill and intangibles net of the deferred tax liability. See also Note 2, “Pro Forma Allocation of Purchase Price.”
(4)		Adjustment to reflect assumption of SHB’s subordinated debentures net of estimated fair value adjustment. See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments” (k).
(5)		Adjustment to reflect issuance of non-cumulative perpetual preferred stock by First Citizens Properties, Inc., the real estate investment trust subsidiary of First Citizens. See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments” (m).

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(6)

Adjustment to reflect the risk weighted assets as reported by Southern Heritage Bank on the June 30, 2014 Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only – FFIEC 041 (“Call Report”) filed with the Federal Financial Institutions Examination Council on July 28, 2014 adjusted for the redemption of the SBLF shares and applicable fair value adjustments. Adjustments consist of the following:

	Southern Heritage Bank’s risk weight assets as reported on the June 30, 2014 Call Report	$	161,673
	Decrease for cash to redeem the SBLF prior to closing		(5,105)
	Decrease for fair value adjustment on loans		(5,131)
	Increase for fair value adjustment of premises and equipment		1,300
		$	152,737

	See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments” for additional information regarding fair value adjustments.
(7)	Adjustments to total average assets include the following:

	Southern Heritage Bank’s total average assets as reported on June 30, 2014 Call Report	$	246,056
	Decrease for cash to redeem SBLF prior to closing		(5,105)
	Decrease for net cash considerations		(2,087)
	Decrease of estimated transaction expenses		(1,000)
	Decrease for fair value adjustment on loans		(5,131)
	Increase for reversal of Southern Heritage Bank’s allowance for loan losses		2,023
	Increase for preliminary estimates of goodwill		9,928
	Increase for preliminary estimate of core deposit intangible		1,561
	Increase for fair value adjustment of premises and equipment		1,300
	Total adjustment to total average assets	$	247,545

(8)	Adjustments to total assets consist of the following:
	SHB’s total assets as reported (unaudited) as of June 30, 2014	$	243,547
	Decrease for cash to redeem the SBLF prior to closing		(5,105)
	Sum of purchase accounting adjustments		7,594
	Sum of pro forma adjustments		(1,000)
		$	245,036

	See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments” for additional information.
(9)	Adjustment to tangible assets consists of the adjustments totaling $245,036 in (8) above less goodwill and intangibles totaling $10,958.
(10)	Tier 1 leverage ratio is calculated as Tier 1 capital (total tangible equity capital) to average assets for regulatory leverage capital.
(11)	Tier 1 risk based capital ratio is calculated as Tier 1 capital (total tangible equity capital) to risk weighted assets.
(12)	Total risk based capital ratio is calculated as total qualified capital to risk weighted assets.

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First Citizens National Bank

		June 30, 2014 (as reported)(1)			Adjustments				Pro Forma
Total equity (before minority interests)		$	129,197		$	(5,000)	(2)		$	124,197
Less:
Net unrealized gain (loss) on available-for-sale debt securities			3,631							3,631
Disallowed goodwill & intangibles			14,013							14,013
Add qualifying restricted core capital elements:
Noncontrolling minority interests			2,000			2,000	(3)			4,000
Tier 1 capital (total tangible equity capital)			113,553			(3,000)				110,553
Reserve for loan losses			7,807							7,807
Unrealized gains (losses) on available-for-sale equity securities			19							19
Tier 2 capital			7,826							7,826
Total qualified capital			121,379			(3,000)	(4)			118,379
Risk weighted assets			683,771			(3,000)	(4)			680,771
Total average assets			1,186,489			(3,000)	(4)			1,183,489
Less: disallowed goodwill and intangibles			14,013							14,013
Average assets for regulatory leverage capital			1,172,476			(3,000)				1,169,476
Total assets			1,186,489			(3,000)	(4)			1,183,489
Total tangible assets			1,172,476			(3,000)	(4)			1,169,476
Tier 1 leverage ratio(5)			9.68%							9.45%
Tier 1 risk based capital ratio(6)			16,61%							16.24%
Total risk based capital ratio(7)			17.75%							17.39%
Total tangible equity capital to total tangible assets			9.68%							9.45%

____________________
 

(1)		Balances as of June 30, 2014 as reported on First Citizens National Bank’s Call Report filed with the FFIEC on July 30, 2014.
(2)		Adjustment to reflect cash dividends from First Citizens National Bank to First Citizens to be used as funding source for cash consideration to effect the transaction.
(3)		Adjustment to reflect issuance of non-cumulative perpetual preferred stock by First Citizens Properties, Inc., the real estate investment trust subsidiary of First Citizens. See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments” (m).
(4)		Adjustments to risk weighted assets, total average assets, total assets and total tangible assets reflect the net decrease in assets as a result of $5,000 dividend to First Citizens as noted in (2) above net of proceeds of $2,000 from issuance of non- cumulative perpetual preferred stock as described in (3) above.
(5)		Tier 1 leverage ratio is calculated as Tier 1 capital (total tangible equity capital) to average assets for regulatory leverage capital.
(6)		Tier 1 risk based capital ratio is calculated as Tier 1 capital (total tangible equity capital) to risk weighted assets.
(7)		Total risk based capital ratio is calculated as total qualified capital to risk weighted assets.

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Southern Heritage Bank

		June 30, 2014 (as reported)(1)			Adjustments				Pro Forma
Total equity		$	32,538		$	4,361	(2)		$	36,899
Less:
Net unrealized (loss) gain on available-for-sale debt securities			(486)			486	(3)			–
Disallowed goodwill & intangibles			–			10,958	(4)			10,958
Tier 1 capital (total tangible equity capital)			33,024			(7,083)				25,941
Reserve for loan losses			2,021			(2,021)	(5)			–
Tier 2 capital			2,021			(2,021)				–
Total qualified capital			35,045			(9,104)				25,941
Risk weighted assets			161,673			($8,936)	(6)			152,737
Total average assets			246,056			4,576	(7)			250,632
Less: disallowed goodwill and intangibles			–			10,958	(4)			10,958
Average assets for regulatory leverage capital			246,056			(6,382)				239,674
Total assets			243,248			4,576	(7)			247,824
Total tangible assets			243,248			(6,382)	(8)			236,866
Tier 1 leverage ratio(9)			13.42%							10.80%
Tier 1 risk based capital ratio(10)			20.43%							16.98%
Total risk based capital ratio(11)			21.68%							16.98%
Total tangible equity capital to total tangible assets			13.58%							10.93%

____________________
 

(1)	Balances as of June 30, 2014 as reported on Southern Heritage Bank’s June 30, 2014 Call Report.
(2)	Adjustments to total equity consist of the following:

	Decrease for SHB’s historical equity	$	(32,538)
	Increase for total purchase price		33,082
	Increase for assumed subordinated debentures, net of fair value and related deferred tax adjustments		4,132
	Decrease for net assets of SHB as of June 30, 2014		(315)
	Total net adjustments	$	4,361

	See also Note 2, “Pro Forma Allocation of Purchase Price” and Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments.”
(3)	Adjustment to reflect reversal of Southern Heritage Bank’s historical accumulated other comprehensive income balance.
(4)	Adjustment to reflect preliminary estimate of goodwill and intangibles. See also Note 2, “Pro Forma Allocation of Purchase Price.”
(5)	Adjustment to reflect the reversal of Southern Heritage Bank’s recorded allowance for loan losses. See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments.”
(6)	Adjustments to risk weighted assets as reported by Southern Heritage Bank on the June 30, 2014 Call Report consist of the following:

	Decrease for cash to redeem the SBLF prior to closing	$	(5,105)
	Decrease for fair value adjustment on loans		(5,131)
	Increase for fair value adjustment of premises and equipment		1,300
	Total net adjustments	$	(8,936)

	See also Note 3, “Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments” for additional information regarding fair value adjustments.

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(7)	Adjustments to average and total assets as reported by Southern Heritage Bank on the June 30, 2014 Call Report consist of the following:

	Decrease for cash to redeem SBLF prior to closing	$	(5,105)
	Decrease for fair value adjustment on loans		(5,131)
	Increase for reversal of Southern Heritage Bank’s allowance for loan losses		2,023
	Increase for preliminary estimate of goodwill		9,928
	Increase for preliminary estimate of core deposit intangible		1,561
	Increase for fair value adjustment of premises and equipment		1,300
	Total net adjustments	$	4,576

Note 5 – Historical and Pro Forma Cash Dividends Per Share

       The following information reflects cash dividends per share on a historical and pro forma basis for the six months ended June 30, 2014 and year ended December 31, 2013:

____________________
 

*

Per Equivalent SHB Share is calculated as the pro forma combined multiplied by the exchange rate of 0.2876 set forth in the Merger Agreement.

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UNAUDITED COMPARATIVE PER SHARE DATA

       The following information presented below should be read together with: (i) First Citizens’ audited consolidated financial statements and accompanying notes for the year ended December 31, 2013, and unaudited consolidated financial statements and accompanying notes for the six months ended June 30, 2014, both of which are included elsewhere in this Proxy Statement/Prospectus; and (ii) SHB’s audited consolidated financial statements and accompanying notes for the year ended December 31, 2013, and SHB’s unaudited consolidated financial statements and accompanying notes for the six months ended June 30, 2014, also included elsewhere in this Proxy Statement/Prospectus. See “Index to Financial Statements.”

       The unaudited pro forma adjustments are based upon available information and certain assumptions that First Citizens’ management believes are reasonable. The unaudited pro forma data, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of factors that may result as a consequence of the merger or consider any potential impacts of current market conditions of the merger on revenues, expense efficiencies, asset dispositions, among other factors. As a result, unaudited pro forma data is presented for illustrative purposes only and does not represent an attempt to predict or suggest future results. Upon completion of the merger, the operating results of Southern Heritage Bank will be reflected in the consolidated financial statements of First Citizens on a prospective basis.

____________________
 

(1)		Represents the book value (per Selected Financial Data) per share of First Citizens stock.
(2)		Represents the book value per share of First Citizens stock multiplied by the assumed exchange ratio of 0.2876 and adding the per share cash consideration of $12.25, which does not reflect any adjustments. The value does not reflect cash to be paid in lieu of fractional shares and is rounded to two decimals.

       The table shows: (1) the book value assigned to First Citizens’ common stock on June 30, 2014 and on July 31, 2014, the most recent date practicable preceding the date of this Proxy Statement/Prospectus; and (2) the equivalent proforma value of a share of SHB common stock at such dates based on the value of the consideration to be received by SHB shareholders in the merger with respect to each share.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

       This Proxy Statement/Prospectus contains certain forward-looking statements about the financial condition, results of operations and business of First Citizens and SHB and about the combined companies following the merger. These statements concern the cost savings, revenue enhancements and other advantages the companies expect to obtain from the merger, the anticipated impact of the merger on First Citizens’ financial performance, tax consequences and accounting treatment of the merger, receipt of regulatory approvals and earnings estimates for the combined company. These statements appear in several sections of this Proxy Statement/Prospectus, including “SUMMARY”, “RISK FACTORS”, “THE MERGER – Reasons for the Merger”, “INFORMATION ABOUT FIRST CITIZENS – Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “INFORMATION ABOUT SHB – Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Also, the forward-looking statements generally include any of the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “should,” “will,” “may” or “plans” or similar expressions.

       Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of First Citizens and SHB, and of the combined companies, may differ materially from those expressed in these forward-looking statements. Many of the factors that could influence or determine actual results are unpredictable and not within the control of First Citizens or SHB. In addition, neither First Citizens nor SHB intends to, nor are they obligated to, update these forward-looking statements after this Proxy Statement/Prospectus is distributed, even if new information, future events or other circumstances have made them incorrect or misleading as of any future date. For all of these statements, First Citizens claims the protection of the safe harbor for forward-looking statements provided in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act.

       Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others, the following possibilities:

• First Citizens and SHB may fail to achieve the anticipated benefits of the merger;
• The value of First Citizens stock after the merger may be affected by factors different from those affecting shares of SHB or First Citizens currently;
• The executive officers and directors of SHB have interests different from typical SHB shareholders;
• Former shareholders of SHB will be limited in their ability to influence First Citizens’ actions and decisions following the merger;
• The merger may result in a loss of current SHB employees;
• Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met;
• The Merger Agreement limits SHB’s ability to pursue an alternative transaction and requires SHB to pay a termination fee under certain circumstances relating to alternative acquisition proposals;
• First Citizens’ actual cost savings resulting from the merger with SHB may be less than expected, First Citizens may be unable to realize those cost savings as soon as expected or First Citizens may incur additional or unexpected costs;
• Changes in general economic and business conditions;
• Changes in market rates and prices of securities, loans, deposits and other financial instruments;
• Changes in legislative or regulatory developments affecting financial institutions in general, including changes in tax, banking, insurance, securities or other financial service related laws;
• Changes in government fiscal and monetary policies;
• The ability of First Citizens to provide market competitive products and services;
• Concentrations within the loan portfolio;
• Fluctuations in prevailing interest rates and the effectiveness of the First Citizens’ interest rate hedging strategies;
• First Citizens’ ability to maintain credit quality;
• The effectiveness of First Citizens’ risk monitoring systems;
• The ability of First Citizens’ borrowers to repay loans;

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• The availability of and costs associated with maintaining and/or obtaining adequate and timely sources of liquidity;
• Geographic concentration of First Citizens’ assets and susceptibility to economic downturns in that area;
• The ability of First Citizens to attract, train and retain qualified personnel;
• Changes in consumer preferences; and
• Other factors generally understood to affect financial results of financial services companies.

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THE ANNUAL MEETING

General

       This Proxy Statement/Prospectus is first being mailed on or about August 29, 2014, to all persons who were SHB shareholders on August 21, 2014.

       Along with this Proxy Statement/Prospectus, SHB shareholders are being provided with a Notice of Annual meeting and form of proxy card for use at the annual meeting of SHB shareholders and at any adjournments or postponements of that meeting.

       At the SHB annual meeting, the following proposals will be considered and voted upon:

       1. Merger Proposal. Considering and voting upon the approval of the agreement and plan of merger, as amended (the “Merger Agreement”), dated as of March 20, 2014, between SHB and First Citizens, which provides for the merger of SHB with and into First Citizens as more fully described in the accompanying Proxy Statement/Prospectus, and the transactions contemplated by the Merger Agreement;

       2. Election of Directors. To elect two Class III members of the board of directors to serve three-year terms until the annual meeting of shareholders in 2017 or until their successors have been duly elected and qualified. Note that upon the effective date of the merger, if approved and then consummated, the directors of SHB will no longer serve as directors of SHB, but since the same directors generally are elected as the directors of Southern Heritage Bank, they will continue to serve in that capacity;

       3. Adjournment. If necessary, to adjourn the annual meeting to a later date; and

       4. Other Business. To transact such other business as may properly come before the annual meeting or any adjournment of the annual meeting.

       All holders of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock shall have the right to vote on the merger; however, only holders of SHB common stock have the right to vote with respect to the other proposals to be submitted at the annual meeting of SHB shareholders.

       The annual meeting of SHB shareholders will be held at the following time and place:

September 25, 2014
5:00 PM (Eastern Time)
3020 Keith Street NW
Cleveland, Tennessee 37312

Proxies

       We encourage SHB shareholders to promptly vote their proxies using the Internet by visiting the following website: www.voteproxy.com or by completing, signing, dating and returning the enclosed proxy card, solicited by SHB’s board of directors, whether or not they are able to attend the SHB annual meeting in person.

       A SHB shareholder may revoke any proxy given in connection with this solicitation by:

• delivering to SHB a written notice revoking the proxy prior to the taking of the vote at the SHB annual meeting;
• delivering a duly executed proxy relating to the same shares bearing a later date;
• re-vote by using the Internet and visiting the following website: www.voteproxy.com; or
• attending the meeting and voting in person (attendance at the SHB annual meeting without voting at the meeting will not in and of itself constitute a revocation of a proxy).
  
  Revocation of proxy by written notice or execution of a new proxy bearing a later date should be submitted to:

Southern Heritage Bancshares, Inc.
3020 Keith Street NW
Cleveland, Tennessee 37312
Attention: Corporate Secretary

       For a notice of revocation or later proxy to be valid, however, SHB must receive it prior to the vote of SHB shareholders at the SHB annual meeting. SHB will vote all shares of SHB common stock represented by valid proxies received through this solicitation and not revoked before they are exercised in the manner described above.

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       SHB is currently unaware of any other matters that may be presented for action at the SHB annual meeting. If other matters do properly come before the SHB annual meeting, then shares of SHB common stock represented by proxies will be voted (or not voted) by the persons named in the proxies in their discretion.

       Please do not forward your SHB stock certificates with your proxy card.

Solicitation of Proxies

       SHB will bear the costs of printing and mailing this Proxy Statement/Prospectus and First Citizens will bear the costs of filing First Citizens’ registration statement on Form S-4 with the SEC.

       If necessary, SHB may use certain of its employees, who will not be specially compensated, to solicit proxies from SHB shareholders, either personally or by telephone, facsimile or mail.

Record Date and Voting Rights On the Merger

       SHB’s board of directors has fixed August 21, 2014 as the record date for the determination of SHB shareholders entitled to receive notice of and to vote at SHB’s annual meeting of shareholders. Accordingly, only SHB shareholders of record and entitled to vote at the close of business on August 21, 2014 will be entitled to notice of and to vote at the SHB annual meeting. At the close of business on SHB’s record date, there were 936,375 shares of SHB common stock, 151,949 shares of SHB Class A common stock, 193,176 shares of SHB Class B common stock and 31,635 shares of SHB Series A preferred stock entitled to vote at the SHB annual meeting held by approximately 847 holders of record, and the executive officers and directors of SHB beneficially owned an aggregate of 18.9% of the outstanding shares of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock.

       The presence, in person or by proxy, of a majority of the votes entitled to be cast by the holders of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock is necessary to constitute a quorum at the annual meeting. Each share of SHB common stock, SHB Class A common stock, SHB Class B common stock and SHB Series A preferred stock outstanding on SHB’s record date entitles its holder to one vote as to the approval of the Merger Agreement or any other proposal that may properly come before SHB’s annual meeting. Holders of those shares will be considered as separate voting groups and will be entitled to vote and be counted as separate voting groups for each class of stock.

       For purposes of determining the presence or absence of a quorum for the transaction of business, SHB will count shares of SHB stock entitled to vote present in person or by proxy at the annual meeting but not voting as present at the annual meeting. Abstentions and broker non-votes will also be counted as present at the SHB annual meeting for purposes of determining whether a quorum exists.

       Under Tennessee law, the Merger Agreement must be approved by a majority of all the votes entitled to be cast on the Merger Agreement. Therefore, the holders of a majority of the outstanding shares of SHB stock entitled to vote, present in person or by proxy at the annual meeting must approve the Merger Agreement. Accordingly, SHB’s board of directors urges SHB shareholders to complete, date and sign the accompanying proxy card and return it promptly in the enclosed postage paid business reply envelope.

Vote Required on Other Matters

       Only holders of SHB common stock are entitled to vote on matters other than the merger at the annual meeting. You are entitled to vote your common stock if our records show that you held your shares as of the close of business on August 21, 2014, the record date. Holders of shares of our Class A common stock, Class B common stock and SHB Series A preferred stock are not entitled to vote on these other matters being presented at the annual meeting.

       Each shareholder is entitled to one vote for each share of common stock held on the record date. On that date, there were 936,375 shares of common stock outstanding and entitled to vote. Shareholders are not entitled to cumulative voting rights.

       For the election of directors, you may vote for (1) all of the nominees, (2) none of the nominees, or (3) all of the nominees except those you designate. For other matters or adjournment, you may vote “FOR” or “AGAINST” or you may “ABSTAIN” from voting.

       If you return your signed proxy card but do not specify how you want to vote your shares, we will vote them “FOR” the election of the nominees for directors, and “FOR” the adjournment, if necessary, of the annual meeting to a later date.

       If a quorum is present at the annual meeting, the director nominees will be elected by a plurality of the votes cast in person or by proxy at the meeting, and any other matters submitted to the shareholders will require the affirmative vote of a majority of the shares of common stock present or represented by proxy at the meeting.

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Recommendation of Board of Directors

       SHB’s board of directors has approved the Merger Agreement. SHB’s board of directors believes that the merger is in the best interests of SHB and SHB shareholders and recommends that SHB shareholders vote “FOR” approval of the Merger Agreement. The determination of SHB’s board of directors with respect to the merger is based on a number of factors, as described in this Proxy Statement/Prospectus. See “THE MERGER – Reasons for the Merger; Recommendation of the Board of Directors.” SHB’s board of directors also believes that the election of the nominees for election as directors are in the best interests of SHB and SHB shareholders and recommends that SHB shareholders vote “FOR” all nominees for election as directors.

Dissenters’ Rights

       Tennessee law permits SHB shareholders to dissent from the merger and to receive the fair value of their shares of SHB stock in cash. To dissent, a SHB shareholder is subject to a number of restrictions and technical requirements, including filing certain notices with SHB and voting his or her shares against the Merger Agreement. The shares of SHB stock held by a dissenter will not be exchanged for stock consideration or cash consideration in the merger and a dissenter’s only right will be to receive the “fair value” of his or her shares of SHB stock in cash.

       Any SHB shareholder who wishes to exercise dissenters’ rights, or who wishes to preserve his or her right to do so, should carefully review Chapter 23 of the Tennessee Business Corporation Act, a copy of which is attached as Annex B to this Proxy Statement/Prospectus, and the section entitled “THE MERGER – Dissenters’ Rights.”

Certain Matters Relating to Proxy Materials

       The rules regarding delivery of proxy statements may be satisfied by delivering a single proxy statement to an address shared by two or more shareholders. This method of delivery is referred to as “householding” and can result in meaningful cost savings. In order to take advantage of this opportunity, we may deliver only one proxy statement to certain multiple SHB shareholders who share an address, unless we have received contrary instructions from one or more of the shareholders. We undertake to deliver promptly upon request a separate copy of the proxy statement, as requested, to a shareholder at a shared address to which a single copy of these documents is delivered. If you hold SHB stock as a record holder and prefer to receive a separate copy of a proxy statement, please call (423) 473-7980 or send a written request to:

Southern Heritage Bancshares, Inc.
3020 Keith Street NW
Cleveland, Tennessee 37312
Attention: Corporate Secretary

       If your SHB stock is held through a broker or bank and you prefer to receive a separate copy of a proxy statement, please contact such broker or bank.

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PROPOSAL 1: THE MERGER

     The discussion in this Proxy Statement/Prospectus of the merger of SHB into First Citizens does not purport to be complete and is qualified by reference to the full text of the Merger Agreement and the other annexes attached to, and incorporated by reference into, this Proxy Statement/Prospectus.

Introduction

     During a special meeting on July 16, 2014, First Citizens’ shareholders voted on and approved the First Citizens Charter Amendment authorizing an additional class of common stock (Class A common stock) and a reclassification of First Citizens’ outstanding common stock. Upon the filing of the First Citizens Charter Amendment, each share of First Citizens common stock outstanding immediately prior to such filing owned by a shareholder of record who owned between one and 299 shares of such common stock was, by virtue of the filing of the First Citizens Charter Amendment and without any action on the part of the holders, reclassified as Class A common stock, on the basis of one share of Class A common stock per each share of common stock so reclassified. Each share of First Citizens common stock outstanding immediately prior to the filing of the First Citizens Charter Amendment owned by a shareholder of record who owned 300 or more shares of such common stock was not reclassified and continued to be classified as common stock. The First Citizens common stock continues to have unlimited voting rights. The First Citizens Class A common stock has no voting rights, except as may be required by law.

Description of the Merger

     At the effective time, SHB will merge with and into First Citizens, with First Citizens being the surviving corporation following the merger. Southern Heritage Bank will survive and become a wholly-owned subsidiary of First Citizens. SHB shareholders, other than SHB shareholders who properly exercise their right to dissent from the merger, will be entitled to receive the per share merger consideration in exchange for each share of SHB stock they own.

     First Citizens will not issue any fractional shares of First Citizens stock. Instead, an SHB shareholder who would otherwise be entitled to receive a fractional share of First Citizens stock as consideration in the merger will receive cash in an amount equal to $42.60 multiplied by the fraction of a share of First Citizens stock to which the shareholder otherwise would be entitled.

     Tennessee law permits SHB shareholders to dissent from the merger and to receive the fair value of their shares of SHB stock in cash. To dissent, an SHB shareholder is subject to a number of restrictions and technical requirements., including filing certain notices with SHB and voting his or her shares against the Merger Agreement. The shares of SHB stock held by a dissenter will not be exchanged for stock consideration or cash consideration in the merger and a dissenter’s only right will be to receive the “fair value” of his or her shares of SHB stock in cash. For a discussion of the procedures that dissenting shareholders must follow to properly exercise their rights, please see “THE MERGER – Dissenters’ Rights.”

Background of the Merger

     From time to time in recent years, SHB has considered the strategic options available to it – as an independent bank, as an acquirer and consolidator in the Tennessee market, or as a party to a merger with another institution. The steady growth trajectory of SHB since its inception in 1999, however, resulted in the principal executives and the board of directors of SHB electing to continue an organic growth pattern while at the same time continuing to evaluate its strategic alternatives to maximize shareholder value.

     Over the past number of years, however, the principal executives and the board of directors began to consider ways to give SHB better size and scale to pursue growth and shareholder value. The health of SHB and its core markets, the current interest rate environment and continued competitive pressures and rising regulatory costs led SHB’s leadership to consider a merger as one avenue to achieve that goal. SHB engaged FIG Partners on March 27, 2013 to act as the exclusive agent to provide investment banking and financial advisory services, in connection with a possible merger with another financial institution. FIG Partners solicited interest in SHB from 29 financial institutions.

     Since approximately 2011, Mr. J. Lee Stewart, president and chief executive officer of SHB, and Mr. Jeffrey D. Agee, president and chief executive officer of First Citizens, have had periodic conversations about strategic options regarding their two companies. In April 2012, Christopher Olsen, currently a principal of Olsen Palmer, a financial advisory firm, advised First Citizens to consider SHB as an acquisition target and conducted a financial analysis of such a transaction. On May 24, 2013, First Citizens engaged Olsen Palmer to act as its exclusive agent to provide investment banking and financial advisory services in connection with the potential acquisition of SHB.

     The first formal visit between Mr. Stewart and Mr. Agee took place in May 2011, in Washington, D.C. This meeting was followed by many others between Mr. Agee and Mr. Stewart as well as other key persons associated with First Citizens and SHB. At each of these meetings, the parties discussed the opportunities presented by a merger between them, the overall banking marketplace in Tennessee, the communities in which SHB does business, and various potential transaction structures.

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     In the spring of 2013, the discussions between the parties and their financial advisors turned toward structuring a formal offer from First Citizens to SHB regarding a proposed merger transaction. The offer was submitted to SHB in the form of an indication of interest first by letter dated May 2, 2013 followed by a letter dated June 14, 2013. The June 14, 2013 letter was not executed by SHB. A formal letter dated December 3, 2013 (herein, the “Letter of Intent”) was executed by SHB on December 4, 2013. In the Letter of Intent, First Citizens offered to purchase SHB for an aggregate purchase price of $32,171,807.50, to be paid in stock and cash, based on the market value of First Citizens’ capital stock at that time. Between the initial indication of interest in May and the December Letter of Intent, the consideration was changed from a range to a set amount ($24.50 per share), the structure changed to provide for an adjustment based on a material decrease in SHB’s accumulated other comprehensive income (“AOCI”), the minimum net worth requirement was added and defined, and certain operational issues were addressed.

     After SHB reviewed the Letter of Intent and consulted with FIG Partners, SHB and FIG Partners determined that the offer received from First Citizens was clearly the highest and best offer received by SHB. The SHB board agreed that the offer was in the best interest of the shareholders and voted to enter into said Letter of Intent which provided First Citizens a period of exclusivity in which to conduct diligence on SHB and draft the definitive Merger Agreement.

     The parties proceeded to perform due diligence on one another on an exclusive basis. On January 23, 2014, First Citizens provided SHB and its advisors with an initial draft of a definitive Merger Agreement. The parties discussed various legal and business points related to this agreement through March 19, 2014. During the due diligence period, First Citizens conducted a thorough due diligence investigation of SHB. This due diligence investigation included on-site review of documents, files and other pertinent materials, as well as in-person meetings and discussions with key SHB personnel. SHB and its advisors conducted a thorough due diligence investigation of First Citizens. This due diligence investigation included a review of historical public filings of First Citizens, on-site review of key documents and interviews with First Citizens’ management. Throughout the due diligence investigation period and negotiation of the Merger Agreement, the deal terms did not materially deviate from the terms set forth in the executed Letter of Intent. The cash and share consideration provided in the executed Letter of Intent remained the same.

     Olsen Palmer presented a financial analysis with regard to a proposed merger with SHB to the executive committee of First Citizens’ board of directors on March 17, 2014. On March 19, 2014, the First Citizens board of directors met to consider the proposed merger between SHB and First Citizens and the terms of the proposed Merger Agreement. The First Citizens board of directors discussed the merger with its legal counsel and management. Olsen Palmer presented its fairness opinion to the board of directors at this meeting. After further discussion among the directors, the Merger Agreement was approved by First Citizens’ board of directors on March 19, 2014 and executed by First Citizens’ chief executive officer on March 20, 2014.

     On March 19, 2014, SHB’s board of directors held a meeting to discuss the transaction and the Merger Agreement. At that meeting, the SHB board of directors was briefed on the Merger Agreement and the ancillary legal documents and had the opportunity to ask questions to SHB’s legal and financial advisors regarding terms and conditions of the transaction included in the Merger Agreement. FIG Partners also presented an analysis of the financial terms set forth in the Merger Agreement. At that time, the total deal value of the transaction was projected to be $32,702,855.75 based on a First Citizens stock price of $44.00. FIG Partners provided SHB’s board of directors with its opinion that closing of the proposed transaction on those terms was fair from a financial perspective to the shareholders of SHB. FIG Partners also provided its written fairness opinion, a copy of which is attached as Annex C to this Proxy Statement/Prospectus, on March 19, 2014.

     SHB’s board of directors unanimously approved the Merger Agreement and transactions contemplated thereby with First Citizens on March 19, 2014. On March 20, 2014, SHB’s chief executive officer executed the Merger Agreement. First Citizens and SHB publicly announced the proposed merger that day.

     On June 27, 2014, First Citizens and SHB amended the Merger Agreement to correct a clerical error in the amount to be paid to SHB’s shareholders for fractional shares. See Annex A to this Proxy Statement/Prospectus for a copy of the First Amendment to the Merger Agreement.

     On August 14, 2014, First Citizens and SHB further amended the Merger Agreement to extend the date upon which the merger must be completed from September 30, 2014 to October 30, 2014, and to provide that the mailing of letters of transmittal and election forms to SHB shareholders by the exchange agent will occur on or immediately following the meeting date of SHB shareholders and that the elections form must be returned by SHB shareholders within fifteen days of such mailing date in order to be considered timely. See Annex A to this Proxy Statement/Prospectus for a copy of the Second Amendment to the Merger Agreement.

Reasons for the Merger; Recommendation of the Board of Directors

     The merger will combine the strengths of First Citizens and SHB and their subsidiary banks. First Citizens has an established presence in West and Middle Tennessee with plans to significantly enhance its market share in those markets. Joining with First Citizens will provide SHB’s customers opportunities offered by a large, resourceful, community-minded bank. First Citizens has been actively seeking other banking locations to expand its presence in Tennessee. The proposed merger with SHB

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accelerates First Citizens’ opportunity to grow across Tennessee and brings to First Citizens’ team a number of outstanding bankers. First Citizens currently operates 21 commercial banking, mortgage, and insurance locations in West and Middle Tennessee, with total assets of approximately $1.18 billion. First Citizens’ management views Bradley County as a logical growth area for its community style of banking. 

     In reaching its determination to approve the Merger Agreement, SHB’s board of directors consulted with SHB’s management and legal and financial advisors and considered a number of factors, including a fairness opinion presented by FIG Partners. FIG Partners took into consideration the results of the limited auction process for the potential sale of SHB in which FIG Partners contacted a total of 29 financial institutions regarding their potential interest in an acquisition of SHB, and First Citizens’ offer was the highest indication received.

     The following is a discussion of information and factors considered by SHB’s board of directors in reaching this determination. This discussion is not intended to be exhaustive, but includes the material factors considered by SHB’s board of directors. In the course of its deliberations with respect to the merger, SHB’s board of directors discussed the anticipated impact of the merger on SHB, SHB’s shareholders and the communities that SHB serves.

     The terms of the Merger Agreement, including the consideration to be paid to SHB’s shareholders, were the result of arm’s length negotiations between representatives of SHB and representatives of First Citizens. In arriving at its determination to approve the Merger Agreement, SHB’s board of directors considered a number of factors, including the following:

• SHB’s board’s familiarity with SHB’s consolidated business, operations, earnings, and financial conditions;
   
• SHB’s board’s review of possible affiliation partners other than First Citizens, the prospects of such other possible affiliation partners, the discussions between FIG Partners and such other possible affiliation partners and the likelihood of any such affiliation;
   
• SHB’s board’s review, based in part by the presentation by SHB’s management and SHB’s legal and financial advisors, of the proposal, including a review of the business, operations, earnings, and financial conditions of First Citizens, as well as the potential results from a sale to First Citizens, and also including the financial presentation of FIG Partners and the opinion of FIG Partners dated as of March 19, 2014, that, as of March 19, 2014, and subject to the assumptions, limitations and qualifications set forth in the opinion, the total aggregate merger consideration to be received from First Citizens, which consisted of no more than 377,658 shares of First Citizens stock and $16,085,903.75 in cash, is fair, from a financial point of view, to the shareholders of SHB (see Opinion of FIG Partners, a copy of which is attached as Annex C to this Proxy Statement/Prospectus);
   
• SHB’s board’s review of alternatives to such a transaction (including the alternatives of remaining independent and growing organically, remaining independent for a period of time and then selling, and remaining independent and growing through future acquisitions);
   
• The recent business combinations involving financial institutions either announced or completed during the past few years in the United States, the State of Tennessee, and contiguous states, and the effect of such combinations on competitive conditions in SHB’s market area;
   
• A comparison of the proposal from First Citizens to such recent business combinations involving other financial institutions;
   
• SHB’s reliance on its management team in order to continue to profitably grow and a lack of true management succession;
   
• SHB’s reliance on mortgage banking activities in producing a significant portion of its net income and the potential decline in these activities if interest rates increase significantly;
   
• Increasing regulatory and statutory burdens (including costs, time commitments, earnings opportunities) on SHB and its subsidiaries as a community banking organization in general and as a result of the particular status of SHB; and
   
• The opportunity for SHB shareholders to exchange their shares of SHB for shares of First Citizens in a tax free exchange and resulting in the ownership of a stock currently paying a higher dividend.

     The reasons set out above for the merger are not intended to be exhaustive but include the material factors considered by the board of directors of SHB in approving the transaction and the Merger Agreement. In reaching its determination, the board of directors of SHB did not assign any relative or specific weight to different factors and individual directors may have given weight to different factors. Based on the reasons stated above, the board of directors of SHB believes that the merger is in the best interest of SHB and its shareholders and therefore the board of directors of SHB approved the Merger Agreement and the transactions contemplated thereby.

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     Based on a thorough evaluation of these factors, SHB’s board of directors believes the merger is in the best interests of SHB and SHB’s shareholders. SHB’s board of directors recommends that SHB shareholders vote “FOR” approval of the Merger Agreement and the transactions contemplated thereby.

Opinion of Financial Advisor to SHB

     FIG Partners was engaged by SHB to advise SHB’s board of directors as to the fairness of the consideration, from a financial perspective, to be paid by First Citizens to the SHB shareholders as set forth in the Merger Agreement.

     By letter dated March 27, 2013, SHB retained FIG Partners to act as its financial advisor in connection with a possible business combination with another financial institution. FIG Partners is a nationally recognized investment banking firm and, as part of its investment banking business, is continually engaged in the valuation of financial institutions in connection with mergers and acquisitions, private placements and valuations for other corporate purposes. As a specialist in securities of financial institutions, FIG Partners has experience in, and knowledge of, banks, thrifts and bank and thrift holding companies. Neither FIG Partners nor any of its affiliates has a material financial interest in SHB or First Citizens. FIG Partners was selected to advise SHB’s board of directors based upon its familiarity with Southeastern financial institutions and knowledge of the banking industry as a whole.

     FIG Partners performed certain analyses described herein and presented the range of values for SHB, resulting from such analyses, to the board of directors of SHB in connection with its advice as to the fairness of the consideration to be paid by First Citizens. In forming its opinion as to the fairness of the proposed consideration to be received by SHB’s shareholders, FIG Partners also took into consideration the results of the limited auction process for the potential sale of SHB in which FIG Partners contacted a total of 29 financial institutions regarding their potential interest in an acquisition of SHB, and First Citizens’ offer was the highest indication received.

     FIG Partners acted as financial advisor to SHB in connection with the proposed merger and participated in certain of the negotiations leading to the Merger Agreement. At the March 19, 2014 meeting of the board of directors of SHB at which SHB’s board of directors considered and approved the Merger Agreement, FIG Partners delivered to SHB’s board of directors its written opinion that as of March 19, 2014, the merger consideration was fair to SHB’s shareholders from a financial point of view. In requesting FIG Partners’ advice and opinion, no limitations were imposed by SHB upon FIG Partners with respect to the investigations made or procedures followed by it in rendering its opinion. The full text of the opinion of FIG Partners, dated March 19, 2014, which describes the procedures followed, assumptions made, matters considered and limitations on the review undertaken, is attached hereto as Annex C. SHB shareholders should read this opinion in its entirety. The description of the opinion set forth herein is qualified in its entirety by reference to the full text of such opinion.

     In arriving at its fairness opinion, FIG Partners reviewed certain publicly available business and financial information relating to SHB and First Citizens. FIG Partners considered certain financial and stock market data of SHB and First Citizens, compared that data with similar data for certain other publicly-held banks and bank holding companies and considered the financial terms of certain other comparable bank transactions that had recently been completed. FIG Partners also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria that it deemed relevant. In connection with its review, FIG Partners did not independently verify the foregoing information and relied on such information as being complete and accurate in all material respects. Financial forecasts prepared by FIG Partners were based on assumptions believed by FIG Partners to be reasonable and to reflect currently available information. FIG Partners did not make an independent evaluation or appraisal of the assets of SHB or First Citizens.

     For purposes of its opinion and in connection with the review of the proposed merger, FIG Partners, among other things:

• Reviewed the Merger Agreement;
   
• Reviewed certain historical publicly available business and financial information concerning SHB and First Citizens including, among other things, quarterly and annual reports filed by the parties with the Federal Reserve, the FDIC or the Office of the Comptroller of the Currency as applicable;
   
• Reviewed certain internal financial statements and other financial and operating data concerning SHB and First Citizens;
   
• Analyzed certain financial estimates and budgeted information prepared by the management of SHB;
   
• Participated in discussions with members of the senior managements of SHB and First Citizens for the purpose of reviewing the future prospects of SHB and First Citizens, including financial estimates related to their respective businesses, earnings, assets, and liabilities and credit quality;
   
• Reviewed the terms of recent merger and acquisition transactions, to the extent publicly available, involving banks, thrifts and bank and thrift holding companies that FIG Partners considered and deemed relevant; and
   
• Performed such other analyses and considered such other factors as FIG Partners has deemed appropriate.

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     FIG Partners assumed and relied, without independent verification, upon the accuracy and completeness of all of the financial and other information that has been provided to them by SHB, and of the publicly available information that was reviewed. FIG Partners is not an expert in the evaluation of allowances for loan losses and did not independently verify such allowances, and has relied on and assumed that the aggregate allowances for loan losses set forth on the balance sheets of SHB and First Citizens at December 31, 2013 were adequate to cover such losses and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. FIG Partners was not retained to and did not conduct a physical inspection of any of the properties or facilities of SHB, did not make any independent evaluation or appraisal of the assets, liabilities or prospects of SHB, was not furnished with any such evaluation or appraisal, and did not review any individual credit files. FIG Partners’ opinion is necessarily based on economic, market, and other conditions as in effect on, and the information made available to FIG Partners as of, the date of the opinion.

     FIG Partners reviewed and tabulated statistical data regarding the loan portfolio, securities portfolio and other performance ratios and statistics of SHB. Financial projections were prepared and analyzed as well as other financial studies, analyses and investigations as deemed relevant for the purposes of this opinion. In review of the aforementioned information, FIG Partners took into account its assessment of general market and financial conditions, its experience in other similar transactions and its knowledge of the banking industry generally.

     In connection with rendering the fairness opinion and preparing its written and oral presentation to SHB’s board of directors, FIG Partners performed a variety of financial analyses, including those summarized herein. The summary does not purport to be a complete description of the analyses performed by FIG Partners in this regard. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances and therefore, such an opinion is not readily susceptible to summary description. Accordingly, notwithstanding the separate factors summarized below, FIG Partners believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and factors, could create an incomplete view of the evaluation process underlying its opinion. In performing its analyses, FIG Partners made numerous assumptions with respect to industry performance, business and economic conditions and other matters, many of which are beyond SHB’s or First Citizens’ control. The analyses performed by FIG Partners are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the values of businesses do not purport to be appraisals or to reflect the process by which businesses actually may be sold.

     In the proposed merger, SHB shareholders will receive in aggregate $16,085,903.75 in cash and shares of First Citizens stock in the amounts as follows: 269,302 shares of First Citizens common stock and 108,356 shares of First Citizens Class A common stock, for all of the issued and outstanding stock of SHB. Based on a trading price of $44.00 per share for First Citizens’ common stock, the proposed aggregate consideration to be received totals $32,702,855.75, subject to downward adjustment, as further described in the Merger Agreement.

     The aggregate merger consideration represents a multiple of SHB’s December 31, 2013 stated and tangible common equity of 162.9%, a multiple of SHB’s 2013 earnings of 12.00x and a multiple of adjusted earnings of 17.64x. In addition, the proposed consideration to be received by SHB’s shareholders represents a 6.58% premium over SHB’s December 31, 2013 tangible equity as a percentage of SHB’s December 31, 2013 core deposits.

     Contribution Analysis: FIG Partners prepared a contribution analysis demonstrating percentages of total assets, total loans, total deposits, and tangible common equity, and net income as of the most recently available period for SHB and for First Citizens to be contributed to the combined company on a pro forma basis. SHB shareholders will receive merger consideration of 50.8% stock and 49.2% cash. FIG Partners also calculated the estimated pro forma impact on earnings, book value and dividends for the SHB shareholders who elect to receive 100% First Citizens stock in the merger.

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     Acquisition Comparison Analysis: In performing this analysis, FIG Partners reviewed three groups of comparable merger transactions. The purpose of the analysis was to obtain an evaluation range of SHB based on these comparable bank acquisition transactions. The first group included 371 bank transactions in the United States announced since January 1, 2011, for which transaction pricing information was available and 100% of equity was acquired (the “National Comparable Group”). Median multiples of book value, tangible book value, earnings, adjusted earnings, and the premium paid over the seller’s tangible equity as a percentage of the acquired institution’s core deposits implied by the National Comparable Group transactions were utilized in obtaining a range for the acquisition value of SHB. Given that a significant portion of SHB’s net income is generated from gains on sale of mortgage loans, which are typically considered non-core and highly volatile, FIG Partners adjusted SHB’s earnings by removing these gains in calculating price to adjusted earnings. In addition to reviewing the broad National Comparable Group bank transactions, FIG Partners also reviewed four subsets of the National Comparable Group, based on parameters that were deemed relevant to SHB. The first subset consisted of 224 bank transactions for which the target had less than $300 million in total assets. The second subset consisted of 179 bank transactions for which the target bank had a ratio of less than 2.0% non-performing assets to total assets. The third subset consisted of 119 bank transactions for which the target bank presented a ratio of greater than 0.75% return on average assets for the latest twelve months. The final subset consisted of 85 bank transactions for which the target had total equity to total assets between 6.0% and 9.0%.

     The second group of comparable merger transactions included 77 bank transactions in the Southeast (Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) announced since January 1, 2011, for which transaction pricing information was available and 100% of equity was acquired (the “Southeast Comparable Group”). The third group of comparable merger transactions included seven bank transactions in Tennessee announced since January 1, 2010, for which transaction pricing information was available and 100% of equity was acquired (the “Tennessee Comparable Group”).

     The following tables demonstrate the median multiples of book value, tangible book value, earnings, adjusted earnings and premium paid over the seller’s tangible equity as a percentage of the acquired institution’s core deposits for the various Comparable Groups.

National

										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		284.1		284.1		34.70		34.70		35.35
Low		12.8		13.0		0.70		0.70		(16.88)
Mean		116.2		121.2		18.80		18.80		2.97
Median		115.9		120.1		17.83		17.83		2.61
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		88.1%		84.5%		19.2%		46.6%		77.1%
Total Assets < $300M
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		261.8		261.8		67.23		67.23		14.59
Low		13.8		13.8		6.35		6.35		(16.88)
Mean		112.3		114.1		24.84		24.84		1.84
Median		112.6		113.3		21.55		21.55		1.86
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		94.0%		93.5%		16.9%		33.2%		86.0%

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Nonperforming Assets
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		284.1		284.1		34.70		34.70		22.23
Low		44.7		44.7		2.64		2.64		(11.88)
Mean		133.6		140.1		18.73		18.73		5.02
Median		127.7		132.8		17.73		17.73		4.42
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		82.5%		77.9%		20.1%		46.3%		65.1%
Return On Average Assets
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		284.1		284.1		33.98		33.98		35.35
Low		29.0		29.2		1.57		1.57		(7.84)
Mean		140.8		147.8		16.02		16.02		6.24
Median		133.6		141.4		16.39		16.39		5.99
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		75.8%		69.7%		24.7%		61.7%		54.6%
Total Equity/Total Assets
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		261.8		261.8		33.00		33.00		14.70
Low		19.6		19.6		7.47		7.47		(10.37)
Mean		122.2		125.4		18.41		18.41		2.87
Median		123.2		124.8		17.74		17.74		2.48
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		84.2%		79.5%		22.1%		47.5%		77.1%
Southeast
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		196.4		196.4		33.02		33.02		13.78
Low		13.8		13.8		1.39		1.39		(10.37)
Mean		98.8		103.5		17.61		17.61		0.93
Median		99.0		100.7		16.54		16.54		0.12
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		96.3%		94.7%		13.5%		54.8%		93.0%
Tennessee
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		121.3		124.5		28.57		28.57		1.97
Low		63.7		63.7		16.54		16.54		(3.26)
Mean		89.2		89.9		22.56		22.56		(1.08)
Median		86.7		86.7		22.56		22.56		(2.01)
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		100.0%		100.0%		NM		9.1%		100.0%

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National Most Comparable
										Core Dep.
		P/B		P/TB		P/E		Adj. P/E		Premium
		(%)		(%)		(x)		(x)		(%)
High		185.4		185.4		18.59		18.59		9.23
Low		128.5		128.5		9.84		9.84		3.75
Mean		153.6		155.6		15.17		15.17		6.08
Median		158.6		158.6		16.81		16.81		6.54
FIZN Transaction		162.9		162.9		12.00		17.64		6.58
Percent Rank		77.3%		77.3%		23.4%		62.6%		53.9%

     Discounted Cash Flow Analysis: A discounted cash flow analysis was performed by FIG Partners pursuant to which a range of values of SHB was determined by adding (i) the present value of estimated future dividend streams that SHB could generate over a five-year period and (ii) the present value of the “terminal value” of SHB’s earnings and book value at the end of the fifth year. The “terminal value” of SHB’s earnings and book value at the end of the five-year period was determined by applying a multiple of 10 times the projected terminal year’s earnings and 150% of its fifth year ending tangible book value.

     Dividend streams and terminal values were discounted to present values using a discount rate of 14%. This rate reflects assumptions regarding the required rate of return of holders or buyers of SHB’s common stock. The aggregate value of SHB, determined utilizing a terminal price to earnings multiple of 10 and adding the present value of the total cash flows, was $25,666,000, or $19.55 per SHB common share. In addition, utilizing a terminal value based on a multiple of 150% of SHB’s year five ending equity resulted in an aggregate value of $26,880,000 or $20.47 per SHB common share.

     Adjusted Net Asset Value Analysis: FIG Partners reviewed SHB’s balance sheet data to determine the amount of material adjustments required to the shareholders’ equity of the SHB based on differences between the market value of SHB’s assets and their value reflected on SHB’s financial statements. FIG Partners determined that two adjustments were warranted. FIG Partners added a value of $7,557,000 to reflect an additional value which could be attributable to SHB’s December 31, 2013 core deposits. FIG Partners subtracted a potential credit mark of $2,980,000. The aggregate adjusted net asset value of SHB was determined to be $24,655,000 or $18.90 per SHB common share.

     The fairness opinion is directed only to the question of whether the consideration to be received by SHB’s shareholders under the Merger Agreement is fair and equitable from a financial perspective and does not constitute a recommendation to any SHB shareholder to vote in favor of the merger. No limitations were imposed on FIG Partners regarding the scope of its investigation or otherwise by the SHB.

     Based on the results of the various analyses described above, FIG Partners concluded that the consideration to be received by SHB’s shareholders under the Merger Agreement was fair and equitable from a financial perspective to the shareholders of SHB as of the date of the fairness opinion.

     FIG Partners will receive total fees of approximately $434,750 for all services performed in connection with the sale of SHB and the rendering of the fairness opinion assuming First Citizens’ stock price equals $44.00 at the time of the closing of the proposed merger. In addition, SHB has agreed to indemnify FIG Partners and its directors, officers and employees, from liability in connection with the transaction, and to hold FIG Partners harmless from any losses, actions, claims, damages, expenses or liabilities related to any of FIG Partners’ acts or decisions made in good faith and in the best interest of SHB. Other than with respect to the proposed merger, FIG Partners has not been engaged to provide services to SHB during the past two years.

Opinion of Financial Advisor to First Citizens

     Olsen Palmer, as part of its investment banking services, is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. Based on Olsen Palmer’s reputation and qualifications in evaluating financial institutions, the board of directors of First Citizens engaged Olsen Palmer on May 24, 2013 to provide financial advisory services in connection with the merger and to issue a fairness opinion to the board of directors of First Citizens as to the fairness, from a financial point of view, to First Citizens of the financial terms of the proposed transaction. A copy of Olsen Palmer’s fairness opinion, dated March 19, 2014, which sets forth certain assumptions made, matters considered and limits on the review undertaken by Olsen Palmer, is attached as Annex D to this Proxy Statement/Prospectus.

     No limitations were imposed by First Citizens’ board of directors on Olsen Palmer with respect to the investigations made or procedures followed in rendering its opinion. Neither Olsen Palmer nor the individuals involved in providing Olsen Palmer’s fairness opinion to First Citizens has any present or contemplated future ownership interest in First Citizens. Olsen Palmer will receive a fee for its financial advisory services, a substantial portion of which is contingent upon the closing of the merger. Pursuant to the terms of its engagement letter with First Citizens, Olsen Palmer received a $50,000 fee for providing the fairness opinion and upon completion of the merger will receive a success fee from First Citizens in an amount equal to $250,000.

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In addition, First Citizens has agreed to indemnify Olsen Palmer against certain liabilities and expenses arising out of or incurred in connection with its engagement, including liabilities and expenses which may arise under the federal securities laws. While employed by other firms, certain principals of Olsen Palmer have provided investment banking and financial advisory services to First Citizens during the two year period prior to the date when Olsen Palmer was engaged by First Citizens. Olsen Palmer may in the future provide investment banking and financial advisory services to First Citizens and receive compensation for such services.

     In conducting its fairness analysis, Olsen Palmer reviewed, among other things, the following:

• the Merger Agreement;
   
• certain financial statements and other historical financial information of First Citizens that it deemed relevant;
   
• certain financial statements and other historical financial information of SHB that it deemed relevant;
   
• financial projections for First Citizens for the years ending December 31, 2014 through December 31, 2018 prepared using growth rates and guidance from senior management of First Citizens;
   
• internal financial projections for SHB for the year ending December 31, 2014 as provided by senior management of SHB and as adjusted by senior management of First Citizens;
   
• the pro forma financial impact of the merger of First Citizens based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies as determined by the senior management of First Citizens;
   
• a comparison of certain financial information and stock trading information for First Citizens and SHB with similar institutions for which publicly available information is available;
   
• the financial terms of certain recent business combinations in the commercial banking industry, to the extent publicly available;
   
• the current market environment generally and the banking environment in particular; and
   
• such other information, financial studies, analyses and investigations and financial, economic and market criteria as Olsen Palmer considered relevant.

     Olsen Palmer also held discussions with certain members of First Citizens’ senior management and First Citizens’ representatives concerning the business, financial condition, results of operations and prospects of First Citizens and held similar discussions with certain members of senior management of SHB and its representatives regarding the business, financial condition, results of operations and prospects of SHB.

     In conducting its fairness analysis and rendering its opinion, Olsen Palmer relied upon and assumed the accuracy and completeness of the financial and other information provided to it by First Citizens or SHB and the information that was publicly available. Olsen Palmer was not asked to and did not undertake an independent verification of any of such information and Olsen Palmer does not assume any responsibility or liability for the accuracy or completeness thereof. Olsen Palmer did not make or obtain any evaluations or appraisals of the First Citizens’ or SHB’s assets, did not make an independent evaluation of the adequacy of the allowance for loan losses of First Citizens or SHB, nor did it examine any individual credit files related to First Citizens or SHB.

     Several analytical methodologies were employed by Olsen Palmer and no one method of analysis should be regarded as critical to the overall conclusion reached by Olsen Palmer. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the efficacy of particular techniques. The overall conclusions reached by Olsen Palmer are based on all the analysis and factors presented, taken as a whole, and also on application of Olsen Palmer’s own experience and judgment. Such conclusions may involve significant elements of subjective judgment and qualitative analysis. Olsen Palmer therefore gives no opinion as to the value or merit of any one or more parts of the analyses standing alone.

     In preparing its analyses, Olsen Palmer used earnings estimates and growth rates based on management guidance for First Citizens and internal projections for SHB as provided by senior management of SHB and as adjusted by senior management of First Citizens. Olsen Palmer also received and used in its analyses certain projections of transaction costs, purchase accounting adjustments, expected cost savings and other synergies which were prepared by and/or reviewed with the senior management of First Citizens. With respect to those projections, guidance, estimates and judgments, the respective management of First Citizens and SHB confirmed to Olsen Palmer that those projections, guidance, estimates and judgments reflected the best currently available good faith projections, guidance, estimates and judgments of such respective management of the future financial performance of First Citizens and SHB, respectively, and Olsen Palmer assumed that such performance would be achieved. Olsen Palmer expressed no opinion as to such estimates or the assumptions on which they are based. Olsen Palmer also assumed

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that there has been no material change in First Citizens’ and SHB’s assets, financial condition, results of operations, business or prospects since the date of the most recent financial statements made available to Olsen Palmer. Olsen Palmer assumed in all respects material to its analysis that First Citizens and Southern Heritage Bank will remain as going concerns for all periods relevant to its analyses, that all of the representations and warranties contained in the Merger Agreement and all related agreements are true and correct, that each party to the agreements will perform all of the covenants required to be performed by such party under the Merger Agreement and related agreements, that the conditions precedent in the Merger Agreement are not waived and that the merger is lawful and will qualify as a tax-free reorganization for federal income tax purposes Olsen Palmer also assumed that the form and amount of merger consideration was determined through arms length negotiation between First Citizens and SHB and that in the course of obtaining any necessary regulatory approvals for the consummation of the merger, no conditions will be imposed that will have a material adverse effect on the combined entity or contemplated benefits of the merger, including the cost savings and related synergies expected to result from the merger. With First Citizens’ consent, Olsen Palmer relied upon the advice First Citizens has received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger and the other transactions contemplated by the Merger Agreement. 

     Olsen Palmer’s opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Events occurring after the date of its opinion could materially affect Olsen Palmer’s opinion. Olsen Palmer has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its fairness opinion.

     Olsen Palmer’s opinion is directed to the board of directors of First Citizens in connection with its consideration of the Merger and does not constitute a recommendation to the board of directors of First Citizens or to any shareholder of either First Citizens or SHB as to how any such member of the board or any shareholder should vote at any meeting called to consider and vote upon the merger. Olsen Palmer expressed no opinion as to the fairness of the merger consideration to the holders of any class of securities, creditors or other constituencies of First Citizens. The opinion is directed only to the fairness, from a financial point of view, of the merger consideration to First Citizens and did not address the underlying business decision of First Citizens to engage in the merger, the relative merits of the merger as compared to any other alternative business strategies that might exist for First Citizens or the effect of any other transaction in which First Citizens might engage. In addition, no opinion was expressed as to the value of the stock consideration when issued to the holders of SHB stock pursuant to the Merger Agreement or the prices at which shares of First Citizens common stock may trade any time hereafter. Olsen Palmer did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, director, or employees, or class of such persons, relative to the compensation to be received in the merger by any other shareholder.

     The following summarizes the material financial analyses presented by Olsen Palmer to the First Citizens Board at its meeting on March 19, 2013, which material was considered by Olsen Palmer in rendering its opinion. No company or transaction used in the analyses described below is identical or directly comparable to SHB or the contemplated merger.

     Selected Public Companies Analysis.

     Olsen Palmer analyzed the relative valuation multiples as calculated by SNL Financial LC of 12 publicly-traded banks headquartered in Southeast U.S. (geography defined by SNL Financial LC) with total assets less than $1.5 billion, a ratio of non-performing assets to total assets of less than 2.0% for the most recent quarter available, and a return on average assets of greater than 0.0% for the last twelve months available, including:

• Heritage Financial Group, Inc.
   
• C&F Financial Corporation
   
• WashingtonFirst Bankshares, Inc.
   
• National Bankshares, Inc.
   
• Monarch Financial Holdings, Inc.
   
• First Bancshares, Inc.
   
• Southern First Bancshares, Inc.
   
• First Community Corporation
   
• Xenith Bankshares, Inc.
   
• Bank of the James Financial Group, Inc.
   
• Oconee Federal Financial Corp.
   
• First West Virginia Bancorp, Inc.

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       Olsen Palmer analyzed various financial multiples for each company as calculated by SNL Financial LC including trading price to tangible book value per share, trading price to last 12 months earnings per share, market capitalization to total assets, and the core deposit premium implied by the market capitalization. Olsen Palmer reviewed the mean, median, high and low values for each metric of the selected public companies and compared them to corresponding valuation multiples for SHB implied by the merger consideration. Furthermore, Olsen Palmer selected financial multiples for each metric based on professional judgment and applied the selected financial multiples to SHB’s 2013 earnings, tangible book value at December 31, 2013, total assets at December 31, 2013, and core deposits at December 31, 2013 and determined the implied equity price per share of SHB common stock and then compared those implied equity values per share to the merger consideration of $24.50 per share. The results of the selected public companies analysis are summarized below:

								Core Deposit
		Price to Last						Premium
		12 Months		Price to		Market		Implied by
		Earnings		Tangible Book		Capitalization		Market
		per Share		Value per Share		to Assets		Capitalization
Low		8.4x		96.7%		6.64%		(0.51%)
High		32.8x		182.1%		28.13%		13.06%
Median		13.9x		127.2%		9.22%		3.18%
Mean		15.8x		124.4%		11.82%		5.31%
Olsen Palmer Selected Financial
Multiples Range		14.0x - 17.0x		120.0% - 140.0%		9.0% - 13.0%		3.0% - 6.0%
SHB Implied Value Range per Share		$29.05 - $35.28		$18.35 - $21.41		$16.25 - $23.47		$19.67 - $24.06
Merger Consideration per Share		$24.50		$24.50		$24.50		$24.50

       Selected Transactions Analysis.

       Olsen Palmer analyzed publicly available information relating to 17 selected acquisitions of banks announced between March 17, 2012 and March 16, 2014 for targets headquartered in the Southeast U.S. (geography defined by SNL Financial LC) with total assets less than $1.0 billion, a ratio of non-performing assets to total assets of less than 2.0% for the most recent quarter available, and a return on average assets of greater than 0.0% for the last twelve months available. The selected transactions used in the analysis included (buyer / seller – announce date):

• TriSummit Bank / Community National Bank - 1/14/14
   
• Banco Sabadell SA / JGB Bank NA - 12/4/13
   
• Premier Financial Bancorp Inc. / Bank of Gassaway - 11/19/13
   
• Southern Missouri Bancorp Inc. / Ctzns State Bkshs of Bald Knob - 11/7/13
   
• Home Bancorp Inc. / Britton & Koontz Capital Corp. - 11/5/13
   
• NewBridge Bancorp / CapStone Bank - 11/1/13
   
• Georgia Commerce Bancshares / Brookhaven Bank - 10/1/13
   
• New Century Bancorp Inc. / Select Bancorp Inc. - 9/30/13
   
• Cardinal Financial Corp. / United Financial Banking Co. - 9/9/13
   
• Community & Southern Hldgs Inc. / Verity Capital Group Inc. - 9/4/13
   
• First Community Corp. / Savannah River Financial Corp. - 8/14/13
   
• Carolina Alliance Bank / Forest Commercial Bank - 8/8/13
   
• First Federal Bancshares of AR / First National Security Co. - 7/1/13
   
• Old Florida Bancshares Inc. / New Traditions National Bank - 11/6/12
   
• Bank of the Ozarks Inc. / Genala Banc Inc. - 10/4/12
   
• Peoples Bancorp Inc. / Sistersville Bancorp Inc. - 6/5/12
   
• Community Bancshares of MS / Community Holding Co. of FL - 5/11/12

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       Olsen Palmer analyzed various financial multiples for each transaction as calculated by SNL Financial LC including price to tangible book value, price to last 12 months earnings, price to total assets, and the core deposit premium implied by the transaction value. Olsen Palmer reviewed the mean, median, high and low values for each metric of the selected transactions and compared them to corresponding valuation multiples for SHB implied by the merger consideration. Furthermore, Olsen Palmer selected financial multiples for each metric based on professional judgment and applied the selected financial multiples to SHB’s 2013 earnings, tangible book value at December 31, 2013, total assets at December 31, 2013, and core deposits at December 31, 2013 and determined the implied equity price per share of SHB common stock and then compared those implied equity values per share to the merger consideration of $24.50 per share. The results of the selected public companies analysis are summarized below:

		Price to Last						Core Deposit
		12 Months		Price to				Premium
		Earnings		Tangible Book		Price		Implied by
		per Share		Value per Share		to Assets		Transaction Value
Low		8.0x		86.7%		8.5%		(2.1%)
High		52.5x		264.5%		25.4%		18.1%
Median		16.7x		120.0%		12.9%		3.3%
Mean		23.0x		131.1%		14.5%		3.8%
Olsen Palmer Selected Financial
Multiples Range		16.0x - 20.0x		120.0% - 150.0%		12.0% - 15.0%		3.0% - 5.0%
SHB Implied Value Range per Share		$33.20 - $41.50		$18.35 - $22.94		$21.67 - $27.08		$19.67 - $22.60
Merger Consideration per Share		$24.50		$24.50		$24.50		$24.50

       Discounted Cash Flow Analysis.

       Olsen Palmer analyzed the discounted present value of SHB’s projected free cash flows for the years ending December 31, 2014 through 2018 on a standalone basis. Olsen Palmer estimated cash flows based on dividendable tangible common equity, defined as the tangible common equity in excess of a minimum 8.0% tangible common equity to tangible assets ratio. The discounted cash flow analysis was based on SHB financial forecasts provided by senior management of First Citizens. Olsen Palmer used calendar year 2018 as the final year for the analysis. Olsen Palmer applied price to earnings multiples, ranging from 16.0x to 20.0x, to SHB’s calendar year 2018 net income in order to derive a range of terminal values for SHB in 2018.

       The projected cash flows and terminal values were discounted using rates ranging from 12.0% to 14.0%, which reflected the cost of equity capital estimated for SHB using the Ibbotson discount rate build-up method based on the sum of a risk-free rate, equity risk premium, and size premium. The resulting range of present equity values was divided by the number of shares outstanding in order to arrive at a range of present values per SHB share. Olsen Palmer reviewed the range of per share prices derived in the discounted cash flow analysis and compared them to the price per share for SHB implied by the merger consideration. The results of the discounted cash flow analysis are summarized below:

       Conclusion.

       Based upon and subject to the foregoing, it is Olsen Palmer’s opinion that, as of March 19, 2014, the merger consideration to be issued pursuant to the terms of the Merger Agreement is fair, from a financial point of view, to First Citizens.

       The full text of the opinion of Olsen Palmer, dated March 19, 2014, which describes the procedures followed, assumptions made, matters considered and limitations on the review undertaken, is attached as Annex D to this Proxy Statement/Prospectus.

Regulatory Approval

       The merger must be approved by the Federal Reserve. First Citizens filed the Notification pursuant to Section 3(a)(5) of the Bank Holding Company Act with the Federal Reserve on April 4, 2014. In connection with the Notification, First Citizens was required to publish public notice of the merger in the newspapers of general circulation in the communities served by the head offices of First Citizens National Bank and Southern Heritage Bank which provided for a 30-day period for public comments. First Citizens published the required notices on April 8, 2014. The Federal Reserve is required to act on the Notification within

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five days of the end of the public comment period. Once the Federal Reserve has approved the merger, federal law requires a waiting period of up to 30 calendar days to complete the merger in order to give the U.S. Department of Justice the opportunity to review and object to the merger. The Federal Reserve approved the merger on May 13, 2014, and has extended the deadline by which it must close to November 13, 2014.

       The merger must also be approved by the TDFI. First Citizens filed an application with the TDFI on April 4, 2014. In connection with the Application, First Citizens was required to publish public notice of the merger in the newspapers of general circulation in each county in which First Citizens National Bank and Southern Heritage Bank have their main offices which provided for a 15-day period for public comments. First Citizens published the required notices on April 8, 2014. In addition to the Application, the TDFI was provided a copy of the Notification to the Federal Reserve and has 30 calendar days to provide any comments to the Federal Reserve on the proposed merger. The TDFI approved the application on July 24, 2014.

       Further, because SHB has agreed to use its best efforts to redeem the SBLF investment by the United States Treasury in the Series D preferred stock of SHB, the Federal Reserve’s consent will also be required for this redemption. The Merger Agreement requires SHB to use its best efforts to (a) cause the redemption of all SBLF preferred stock prior to the effective time of the merger such that, as of the effective time, SHB will have no SBLF preferred stock issued or outstanding, or (b) give proper notice to call for redemption of all outstanding SBLF preferred stock and deposit sufficient funds in trust for such redemption, in each case pursuant to the applicable provisions of the Small Business Lending Fund - Securities Purchase Agreement No. 0438 dated September 8, 2011, by and between SHB and the United States Department of Treasury. A request must be filed with the Federal Reserve by SHB to obtain its consent to consummate the SBLF redemption. In addition, in order to fund the SBLF Redemption, Southern Heritage Bank intends to declare an extraordinary cash dividend, which will require the approval of the FDIC and TDFI.

       We also intend to make all required filings with the SEC under the Securities Act and the Securities Exchange Act, relating to the merger, and with applicable states securities regulatory authorities to the extent required to register the offering of First Citizens stock or to claim an exemption from registration requirements. We cannot assure you as to whether or when the requisite regulatory approvals will be obtained and, if obtained, we cannot assure you as to the date of receipt of any of these approvals, the terms thereof or the absence of any litigation challenging them. Likewise, we cannot assure you that the U.S. Department of Justice or a state attorney general will not attempt to challenge the merger on antitrust grounds or, if such a challenge is made, as to the result of that challenge.

       The merger cannot proceed in the absence of these required regulatory approvals. The approval of any notice or application merely implies satisfaction of regulatory criteria for approval, and does not include review of the merger from the standpoint of the adequacy of the consideration to be received by, or fairness to, shareholders. Regulatory approval does not constitute an endorsement or recommendation of the proposed merger.

       First Citizens and SHB are not aware of any material governmental approvals or actions that are required prior to the parties’ completion of the merger other than those described in this Proxy Statement/Prospectus. If any additional governmental approvals or actions are required, the parties presently intend to seek those approvals or actions. The parties cannot assure you, however, that any of these additional approvals or actions will be obtained.

Accounting Treatment

       The merger will be accounted for as an acquisition by First Citizens using the acquisition method of accounting in accordance with FASB ASC topic 805, “Business Combinations.” SHB will be treated as the acquired corporation for accounting and financial reporting purposes. SHB’s assets, liabilities and other items will be adjusted to their estimated fair value on the closing date of the merger and combined with the historical book values of the assets and liabilities of First Citizens. Applicable income tax effects of these adjustments will be included as a component of the combined company’s deferred tax asset or liability. The difference between the estimated fair value of the assets (including separately identifiable intangible assets, such as core deposit intangibles), liabilities and other items (adjusted as discussed above) and the purchase price will be recorded as goodwill. Consolidated financial statements of First Citizens issued after the merger will reflect these fair values of assets acquired and liabilities assumed and will not be restated retroactively to reflect the historical financial position or results of operations of SHB.

Material United States Federal Income Tax Consequences

       This section describes the anticipated material U.S. federal income tax consequences of the merger generally applicable to U.S. holders (as defined below) of SHB stock who exchange shares of SHB stock for shares of First Citizens stock, cash, or a combination of cash and shares of First Citizens stock pursuant to the merger.

       For purposes of this discussion, a “U.S. holder” means a beneficial owner of SHB stock that is:

• a citizen or resident of the United States;
   
• a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the U.S. or any State or the District of Columbia;

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• a trust that (i) is subject to both the primary supervision of a court within the United States and the control of one or more U.S. persons, or (ii) has a valid election in effect under applicable U.S. treasury regulations to be treated as a U.S. person; or
   
• an estate that is subject to U.S. federal income tax on its income regardless of its source.

       If a partnership (including any entity or arrangement, domestic or foreign, that is treated as a partnership for U.S. federal income tax purposes) holds SHB stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships and partners in such a partnership should consult their tax advisors regarding the tax consequences of the merger to them.

       This discussion addresses only those U.S. holders of SHB stock who hold the stock as a capital asset within the meaning of Section 1221 of the Code. This discussion deals only with the U.S. federal income tax consequences of the merger. No information is provided regarding the tax consequences of the merger under state, local, gift, estate, foreign or other tax laws. We do not intend it to be a complete description of the U.S. federal income tax consequences of the merger to all SHB shareholders in light of their particular circumstances or to holders of SHB stock subject to special treatment under U.S. federal income tax laws, such as:

• tax-exempt organizations;
   
• financial institutions, insurance companies, mutual funds and dealers or brokers in securities;
   
• persons who have elected to use the mark-to-market method of accounting with respect to their securities holdings;
   
• shareholders who hold their shares of SHB stock as part of a hedge, straddle, wash sale, synthetic security, conversion transaction or other integrated investment comprised of shares of SHB stock and one or more other investments;
   
• dealers in securities or foreign currencies or traders in securities;
   
• persons who acquired their shares of SHB stock through the exercise of employee stock options, through a benefit plan, through exercise of warrants or otherwise in a compensatory transaction;
   
• shareholders who are not U.S. persons within the meaning of the Code;
   
• expatriates or persons who have a functional currency other than the U.S. dollar;
   
• partnerships or other pass-through entities and investors in such entities; or
   
• shareholders who exercise their dissenters’ rights.

       This discussion does not address any alternative minimum tax, U.S. federal estate or gift tax, or any state, local or foreign tax consequences of the merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax. This discussion and the tax opinions (described below) are based upon the provisions of the Code, applicable Treasury regulations, administrative rulings and judicial decisions, all as in effect as of the date of this Proxy Statement/Prospectus. There can be no assurance that future legislative, administrative or judicial changes or interpretations, which changes could apply retroactively, will not affect the accuracy of this discussion or the statements or conclusions set forth in the tax opinions referred to below.

       First Citizens and SHB have structured the merger with an intent to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In connection with the filing of the registration statement of which this Proxy Statement/Prospectus forms a part, Waller Lansden Dortch & Davis, LLP (“Waller Lansden”), tax counsel to First Citizens, has delivered its opinion to First Citizens and Baker, Donelson, Bearman Caldwell & Berkowitz, PC (“Baker Donelson”), tax counsel to SHB, has delivered its opinion to SHB that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code and that First Citizens and SHB will each be a party to that reorganization. Copies of these opinions have been filed as exhibits to First Citizens’ registration statement, which has been filed with the SEC. Such opinions have been rendered on the basis of facts, representations, and assumptions set forth or referred to in such opinions and factual representations contained in certificates of the officers of First Citizens and SHB, all of which must continue to be true and accurate in all material respects as of the effective time of the merger. The parties will not be required to consummate the merger unless they receive additional opinions of their respective counsel, dated the closing date of the merger, confirming that the merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and that First Citizens and SHB will each be a party to that reorganization.

       The opinions of the parties’ respective counsel regarding the merger have relied, and the opinions regarding the merger as of the closing date will each rely on, representations, warranties and covenants made by First Citizens and SHB, including those contained in certificates of officers of First Citizens and SHB, and specified assumptions, including an assumption regarding the completion of the merger in the manner contemplated by the Merger Agreement. In addition, the opinions of the parties’

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respective counsel have assumed, and such counsel’s ability to provide the opinions at the closing of the merger will depend on, the absence of changes to the anticipated facts or changes in law between the date of this Proxy Statement/Prospectus and the closing date. If any of those representations, covenants or assumptions is inaccurate, the parties’ respective counsel may not be able to provide one or more of the required opinions to be delivered at the closing of the merger and/or the tax consequences of the merger could differ from those described in the opinions that counsel have delivered. The opinions of the parties’ respective counsel do not bind the Internal Revenue Service (“IRS”) and do not preclude the IRS or the courts from adopting a contrary position. First Citizens and SHB have not requested and do not intend to obtain a ruling from the IRS on the tax consequences of the merger.

U.S. Federal Income Tax Consequences of the Merger to SHB Shareholders

       SHB Shareholders Receiving Only First Citizens Stock

       No gain or loss will be recognized by a holder of SHB stock as a result of the surrender of shares of SHB stock solely in exchange for shares of First Citizens stock pursuant to the merger (except with respect to cash received instead of a fractional share of First Citizens stock, as discussed below). The aggregate tax basis of the shares of First Citizens stock received in the merger (including any fractional shares of First Citizens stock deemed received) will be the same as the aggregate tax basis of the shares of SHB stock surrendered in exchange for the First Citizens stock. The holding period of the shares of First Citizens stock received (including any fractional shares of First Citizens stock deemed received) will include the holding period of shares of SHB stock surrendered in exchange for the First Citizens stock, provided that such shares of SHB stock were held as capital assets of the shareholder at the effective time of the merger.

       SHB Shareholders Receiving Only Cash

       A holder of SHB stock that does not receive any shares of First Citizens stock pursuant to the merger (and is not treated as constructively owning, after the merger, First Citizens stock held by certain family members and entities affiliated with the holder under the Code) will generally recognize gain or loss equal to the difference between the amount of cash received and the holder’s adjusted tax basis in the shares of SHB stock exchanged in the merger. Such gain or loss will be a capital gain or loss, provided that such shares of SHB stock were held as capital assets by the shareholder at the effective time of the merger. Such capital gain or loss will be a long-term capital gain or loss to the extent that, at the effective time of the merger, the holder has a holding period in such SHB stock of more than one year. The Code contains limitations on the extent to which a taxpayer may deduct capital losses from ordinary income.

       SHB Shareholders Receiving Both Cash and First Citizens Stock

       A holder of SHB stock who receives a combination of cash and First Citizens stock (other than cash received instead of a fractional share of First Citizens stock) in exchange for shares of SHB stock pursuant to the merger generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of cash received by such holder of SHB stock (in each case excluding any cash received instead of fractional share interests in First Citizens stock, which shall be treated as discussed below), and (2) the amount by which the sum of the fair market value of the First Citizens stock and cash received by a holder of SHB stock exceeds such holder’s tax basis in its SHB stock. Any recognized gain could be taxed as a capital gain or a dividend. Such gain will generally be capital gain (provided that such shares of SHB stock were held as capital assets by the shareholder at the effective time of the merger), unless the holder’s exchange of SHB stock for cash and First Citizens stock “has the effect of the distribution of a dividend” after giving effect to the constructive ownership rules of the Code, in which case such gain might be treated as ordinary income. If any gain of a former SHB shareholder is treated as a dividend under Section 356 of the Code, the amount of the gain so treated as a dividend is equal to each former SHB shareholder’s ratable share of the accumulated earnings and profits of SHB, not First Citizens, and any amount of gain in excess of such ratable share is treated as capital gain. Any capital gain recognized generally will be long-term capital gain to the extent that, at the effective time of the merger, the holder has a holding period in the SHB stock exchanged in the merger of more than one year. Because the determination of whether a cash payment will be treated as having the effect of a dividend depends primarily upon the facts and circumstances of each SHB shareholder, SHB shareholders are urged to consult their own tax advisors regarding the tax treatment of any cash received in the merger. A SHB shareholder who receives a combination of First Citizens stock and cash in exchange for his or her SHB stock will not be permitted to recognize any loss for U.S. federal income tax purposes.

       The aggregate initial tax basis of the shares of First Citizens stock received in the merger (including any fractional share of First Citizens stock deemed received) will be the same as the aggregate tax basis of the shares of SHB stock surrendered in the merger, increased by the amount of gain recognized in the exchange (whether characterized as capital gain or a dividend, but excluding any gain recognized with respect to any cash received in lieu of a fractional share of First Citizens stock) and reduced by the amount of cash received in the exchange (excluding any cash received in lieu of a fractional share of First Citizens stock). The holding period of the shares of First Citizens stock received (including any fractional share of First Citizens stock deemed received) will include the holding period of shares of SHB stock surrendered in exchange for the First Citizens stock, provided that such shares of SHB stock were held as capital assets of the shareholder at the effective time of the merger.

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       A SHB shareholder’s U.S. federal income tax consequences will also depend on whether his or her shares of SHB stock were purchased at different times at different prices. If they were, the SHB shareholder could realize gain with respect to some of the shares of SHB stock and loss with respect to other shares. Such SHB shareholder would have to recognize such gain to the extent such shareholder receives cash with respect to those shares of SHB stock in which the shareholder’s adjusted tax basis is less than the amount of cash plus the fair market value at the effective time of the merger of the First Citizens stock received, but could not recognize loss with respect to those shares of SHB stock in which the SHB shareholder’s adjusted tax basis is greater than the amount of cash plus the fair market value at the effective time of the merger of the First Citizens stock received. Any disallowed loss would be included in the adjusted basis of the First Citizens stock. Such a SHB shareholder is urged to consult his or her own tax advisor respecting the tax consequences of the merger to that shareholder.

Cash In Lieu of Fractional Shares of First Citizens Stock

       Holders of SHB stock who receive cash in lieu of a fractional share of First Citizens stock will be treated as having received the fractional share in the merger and then as having the fractional share redeemed by First Citizens in exchange for the cash actually distributed instead of the fractional share, with such redemption qualifying as an exchange under Section 302 of the Code. Accordingly, such holders will generally recognize gain or loss equal to the difference between the tax basis of the holder’s SHB stock allocable to that fractional share and the amount of cash received. The gain or loss generally will be capital gain or loss, and long-term capital gain or loss if the SHB stock exchanged has been held for more than one year. The deductibility of capital losses is subject to limitations.

Backup Withholding

       A holder of SHB stock may be subject, under certain circumstances, to backup withholding at a rate of 28% with respect to the amount of cash, if any, received in the merger, including cash received instead of fractional shares of First Citizens stock, unless the holder provides proof of an applicable exemption satisfactory to First Citizens and the exchange agent or furnishes its correct taxpayer identification number, and otherwise complies with applicable requirements of the backup withholding rules. Any amount withheld under the backup withholding rules is not additional tax and may be refunded or credited against the holder’s U.S. federal income tax liability, so long as the required information is timely furnished to the IRS.

Certain Tax Reporting Rules

       Under applicable Treasury regulations, “significant holders” of SHB stock will be required to comply with certain reporting requirements and generally will be required to file a statement with the holder’s U.S. federal income tax return for the taxable year in which the consummation of the merger occurs. That statement must set forth the holder’s adjusted tax basis in, and the fair market value of, the shares of SHB stock surrendered pursuant to the merger (both as determined immediately before the surrender of shares), the date of the merger, and the name and employer identification number of First Citizens and SHB, and the holder will be required to retain permanent records of these facts. We urge each holder of SHB stock to consult its tax advisor as to whether such holder may be treated as a “significant holder.”

       The preceding discussion is intended only as a summary of material United States federal income tax consequences of the merger. It is not a complete analysis or discussion of all potential tax effects that may be important to you. SHB shareholders are strongly encouraged to consult their own tax advisor as to the specific tax consequences resulting from the merger, including tax return reporting requirements, the applicability and effect of federal, state, local and other tax laws and the effect of any proposed changes in the tax laws.

Dissenters’ Rights

Introductory Information

       General. Dissenters’ rights with respect to SHB’s voting stock are governed by the Tennessee Banking Act, which incorporates the dissenters’ rights provisions of the Tennessee Business Corporation Act. Shareholders of SHB have the right to dissent from the merger and to obtain payment of the “fair value” of their shares (as specified in the statute) in the event SHB completes the merger. Strict compliance with the dissent procedures is mandatory. Subject to the terms of the Merger Agreement, SHB could elect to terminate the Merger Agreement even if it is approved by SHB’s shareholders, thus cancelling dissenters’ rights.

       The term “fair value” means the value of a share of SHB’s outstanding voting stock immediately before the completion of the merger, taking into account all relevant factors, but excluding any appreciation or depreciation in anticipation of the merger.

       If you contemplate exercising your right to dissent, we urge you to read carefully the provisions of Chapter 23 of the Tennessee Business Corporation Act which are attached to this Proxy Statement/Prospectus as Annex B. A more detailed discussion of the provisions of the statute is included there. The discussion describes the steps that you must take if you want to exercise your right to dissent. You should read both the summary contained in this section of the Proxy Statement/Prospectus and the full text of the law. We cannot give you legal advice. To completely understand this law, you may want, and we encourage you, to consult with your legal advisor. If you wish to dissent, do not send in a signed proxy unless you mark your proxy to vote against the merger or you will lose the right to dissent.

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       Address for Notices. Send or deliver any written notice or demand required concerning your exercise of dissenters’ rights to J. Lee Stewart, President and Chief Executive Officer, Southern Heritage Bancshares, Inc., 3020 Keith Street NW, Cleveland, Tennessee 37312.

       We urge you to act carefully. We cannot and do not accept the risk of late or undelivered notices or demands. You may call SHB at (423) 473-7980 and ask for J. Lee Stewart or Steve Ledbetter to receive confirmation that your notice or demand has been received. If your notice or demand is not timely received by SHB, then you will not be entitled to exercise your dissenters’ rights. SHB’s shareholders bear the risk of non-delivery and of untimely delivery.

If you intend to dissent, or if you think that dissenting might be in your best interests, you should read Annex B carefully.

Summary of Chapter 23 of the Tennessee Business Corporation Act – Dissenters’ Rights

       The following is a summary of Chapter 23 of the Tennessee Business Corporation Act and the procedures that a shareholder must follow to dissent from the proposed merger and to perfect his, her or its dissenters’ rights and receive cash rather than shares of First Citizens stock if the Merger Agreement is approved and the merger is completed. This summary is qualified in its entirety by reference to Chapter 23, which is reprinted in full as part of this Annex B to this Proxy Statement/Prospectus. Annex B should be reviewed carefully by any shareholder who wishes to perfect his or her dissenters’ rights. Failure to strictly comply with the procedures set forth in Chapter 23 will, by law, result in the loss of dissenters’ rights. It may be prudent for a person considering whether to dissent to obtain professional counsel.

       If the proposed merger of SHB with and into First Citizens is completed, any shareholder who has properly perfected his or her statutory dissenters’ rights in accordance with Chapter 23 has the right to obtain, in cash, payment of the fair value of such shareholder’s shares of SHB stock. By statute, the “fair value” is determined immediately prior to the completion of the merger and excludes any appreciation or depreciation in anticipation of the merger.

       To exercise dissenters’ rights under Chapter 23, a SHB shareholder must:

• deliver to SHB, before the annual meeting, written notice of her, his or its intent to demand payment for her, his or its shares of SHB’s outstanding stock if the merger is completed; and
   
• not vote her, his or its shares in favor of approving and adopting the merger.

       A shareholder of record who fails to satisfy both of these two requirements is not entitled to payment for her, his or its shares of SHB stock under Chapter 23. In addition, any shareholder who returns a signed proxy but fails to provide instructions as to the manner in which such shares are to be voted will be deemed to have voted in favor of approving and adopting the merger and will not be entitled to assert dissenters’ rights.

       A shareholder may assert dissenters’ rights as to fewer than all the shares registered in her, his or its name only if she, he or it dissents with respect to all shares beneficially owned by any one beneficial shareholder and notifies SHB in writing of the name and address of each person on whose behalf she, he or it is asserting dissenters’ rights. The rights of such a partial dissenter are determined as if the shares as to which he or she dissents and his or her other shares are registered in the names of different SHB shareholders.

       If the merger is approved and adopted at the SHB shareholders’ meeting, SHB must deliver a written dissenters’ notice (the “Dissenters’ Notice”) to all SHB shareholders who satisfied the two requirements of Chapter 23 described above. The Dissenters’ Notice must be sent no later than 10 days after the effective time (the date that the merger is completed) and must:

• State where the demand for payment must be sent and where and when certificates for certificated shares must be deposited;
   
• Inform holders of uncertificated shares to what extent transfer of those shares will be restricted after the demand for payment is received;
   
• Supply a form for demanding payment that includes the date of the announcement of the proposed merger to the public (March 20, 2014) and requires that the shareholder asserting dissenters’ rights certify whether or not she, he or it acquired beneficial ownership of such shares prior to said date;
   
• Set a date by which SHB must receive the demand for payment (which date may not be fewer than 40 nor more than 60 days after the Dissenters’ Notice is delivered) and states that the shareholder shall have waived his or her right to demand payment unless the form is received by such specified date;
   
• State SHB’s estimate of the fair value of the shares;
   
• State that upon written request SHB will provide to such SHB shareholder the number of shareholders who return the forms and the number of shares held thereby;

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• State the date by which the notice to withdraw his or her demand must be sent, which must be within 20 days of the date upon which the form must be received by SHB; and
   
• Be accompanied by a copy of Chapter 23, if not previously provided to such shareholder (set forth in Annex B to this document).

       A SHB shareholder of record on the record date who receives the Dissenters’ Notice must demand payment, certify that she, he or it acquired beneficial ownership of such shares prior to the date set forth in the Dissenters’ Notice and deposit her, his or its stock certificates in accordance with the terms of the Dissenters’ Notice. SHB may elect to withhold payment required by Chapter 23 from the dissenting shareholder unless such shareholder was the beneficial owner of the shares prior to the public announcement of the proposed merger on or about March 20, 2014. A dissenting shareholder will retain all other rights of an SHB shareholder until those rights are canceled or modified by the completion of the merger. A shareholder of record who does not demand payment or deposit her, his or its share certificates where required, each by the date set in the Dissenters’ Notice, is not entitled to payment for his, her or its shares under Chapter 23 or otherwise as a result of the merger. A demand for payment may not be withdrawn unless consented to by SHB.

       SHB may restrict the transfer of any uncertificated shares from the date the demand for their payment is received until the merger is completed. A SHB shareholder for whom dissenters’ rights are asserted as to uncertificated shares of SHB stock retains all other rights of an SHB shareholder until these rights are canceled or modified by the completion of the merger.

       At the effective time or upon receipt of a demand for payment, whichever is later, SHB must offer to pay each dissenting shareholder who strictly and fully complied with Chapter 23 the amount that SHB estimates to be the fair value of her, his or its shares, plus accrued interest from the effective time. The offer of payment must be accompanied by:

• Certain recent SHB financial statements;
   
• SHB’s estimate of the fair value of the shares and interest due;
   
• An explanation of how the interest was calculated;
   
• A statement of the dissenter’s right to demand payment under T.C.A. Section 48-23-209; and
   
• A copy of Chapter 23, if not previously provided to such shareholder.

       If the merger is not completed within two months after the date set for demanding payment and depositing share certificates, SHB must return the deposited certificates and release the transfer restrictions imposed on the uncertificated shares. If, after such return or release, the merger is completed, SHB must send a new Dissenters’ Notice and repeat the payment procedure described above.

       If a dissenting SHB shareholder is dissatisfied with or rejects SHB’s calculation of fair value, such dissenting shareholder must notify SHB in writing of her, his or its own estimate of the fair value of those shares and the interest due, and may demand payment of her, his or its estimate, if:

• She, he or it believes that the amount offered or paid by SHB is less than the fair value of her, his or its shares or that the interest due has been calculated incorrectly;
   
• SHB fails to make payment within two months after the date set forth for demanding payment; or
   
• SHB, having failed to complete the merger, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within two months after the date set for demanding payment.

       A dissenting shareholder waives her, his or its right to dispute SHB’s calculation of fair value unless she, he or it notifies SHB of her, his or its demand in writing within one month after SHB makes or offers payment for such person’s shares.

       If a demand for payment by an SHB shareholder remains unsettled, SHB must commence a proceeding in the appropriate court, as specified in Chapter 23, within two months after receiving the demand for payment, and petition the court to determine the fair value of the shares and accrued interest. If SHB does not commence the proceeding within two months, SHB is required to pay each dissenting shareholder whose demand remains unsettled, the amount demanded. SHB is required to make all dissenting SHB shareholders whose demands remain unsettled parties to the proceeding and to serve a copy of the petition upon each dissenting shareholder. The court may appoint one or more appraisers to receive evidence and to recommend a decision on fair value. Each dissenting shareholder made a party to the proceeding is entitled to judgment for the fair value of such person’s shares plus interest to the date of judgment.

       In an appraisal proceeding commenced under Chapter 23, the court must determine the costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court will assess these costs against SHB, except that the court may assess the costs against all or some of the dissenting shareholders to the extent the

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court finds they acted arbitrarily, vexatiously, or not in good faith in demanding payment under Chapter 23. The court also may assess the fees and expenses of attorneys and experts for the respective parties against SHB if the court finds that SHB did not substantially comply with the requirements of Chapter 23, or against either SHB or a dissenting shareholder if the court finds that such party acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by Chapter 23.

       If the court finds that the services of the attorneys for any dissenting shareholder were of substantial benefit to other dissenting shareholders similarly situated, and that the fees for those services should not be assessed against SHB, the court may award those attorneys reasonable fees out of the amounts awarded the dissenting shareholders who were benefitted.

       The foregoing does not purport to be a complete statement of the provisions of the Tennessee Business Corporation Act relating to statutory dissenters’ rights and is qualified in its entirety by reference to the dissenters rights provisions, which are reproduced in full in Annex B to this Proxy Statement/Prospectus and which are incorporated herein by reference.

       If you intend to dissent, or if you think that dissenting might be in your best interests, you should read Annex B carefully.

Interests of Certain Persons in the Merger

       Certain members of management of SHB and SHB’s board of directors may be deemed to have interests in the merger that are in addition to their interests as SHB shareholders generally. SHB’s board of directors was aware of these interests and considered them, among other matters, in approving the Merger Agreement. These interests include:

• Employment Agreements. As a condition to the merger, First Citizens has required that three of the officers of SHB (J. Lee Stewart, Steve Ledbetter, and Virginia Kibble) enter into employment agreements with non-competition and non-solicitation obligations to be effective upon completion of the merger whereby each individual is entitled to receive a salary, annual bonus, and certain additional incentives;
   
• Insurance. The directors and officers of SHB and Southern Heritage Bank currently covered under comparable policies held by SHB at First Citizens’ expense will receive directors’ and officers’ liability insurance coverage for a period of five years after completion of the merger.
   
• Indemnification. The Merger Agreement provides that First Citizens will indemnify each director and officer of SHB or Southern Heritage Bank as of the effective time of the merger against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or before the effective time of the merger, whether asserted or claimed before, at or after the effective time of the merger, arising in whole or in part out of or pertaining to the fact that he or she was acting in his or her capacity as a director or officer of SHB or Southern Heritage Bank to the fullest extent that the indemnified party would be entitled under charter or bylaws or the similar constituent documents of SHB or Southern Heritage Bank, as applicable, as in effect on the date of the Merger Agreement and to the extent permitted by applicable law.

       Executive officers and directors of SHB will receive shares of First Citizens voting stock in the merger on the same basis as other SHB shareholders. The following chart shows the number of shares of First Citizens voting stock that may be issued to executive officers, directors and holders of more than 10% of SHB voting stock in the merger:

	Beneficial ownership by executive officers, directors and holders of more than 10% of
	SHB voting stock, and their affiliates, as of June 30, 2014	248,149
	Maximum number of shares of First Citizens stock to be received in the merger
	(based on such beneficial ownership)	71,367

Comparison of Rights of Shareholders

       At the effective time of the merger, SHB shareholders who do not exercise dissenters’ rights and receive shares of First Citizens stock will automatically become First Citizens shareholders. First Citizens is a Tennessee corporation governed by the provisions of the Tennessee Business Corporation Act and First Citizens’ charter, as amended, and bylaws, as amended. SHB is a Tennessee corporation governed by provisions of the Tennessee Business Corporation Act, and SHB’s charter, as amended, and bylaws, as amended. See “COMPARISON OF RIGHTS OF SHAREHOLDERS.”

Restrictions on Resales by Affiliates

       The shares of First Citizens stock issued in connection with the merger will not be subject to any restrictions on transfer arising under the Securities Act, except for shares issued to any SHB shareholder who may be deemed to be an “affiliate” of First Citizens after completion of the merger. An affiliate of a corporation, as defined by the rules promulgated under the Securities Act, is a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common

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control with, that corporation. Affiliates generally include directors, executive officers and beneficial owners of 10% or more of a company’s capital stock. Former SHB shareholders who are not affiliates of First Citizens after the completion of the merger may sell their shares of First Citizens stock received in the merger at any time.

       Former SHB shareholders who become affiliates of First Citizens after completion of the merger will be subject to the volume and sale limitations of Rule 144 under the Securities Act until they are no longer affiliates of First Citizens. This Proxy Statement/Prospectus does not cover resales of First Citizens stock received by any person upon completion of the merger, and no person is authorized to make any use of or rely on this Proxy Statement/Prospectus in connection with or to effect any resale of First Citizens shares.

Source of Funds for Cash Portion of Merger Consideration

       First Citizens intends to pay the cash portion of the merger consideration to the SHB shareholders from funds available to First Citizens at closing. First Citizens currently intends these funds to be comprised primarily of $12 million of borrowing from First Tennessee Bank National Association, $2 million from the proceeds of an equity offering by its indirect, wholly-owned real estate investment trust subsidiary, and $2 million from a cash dividend paid by First Citizens National Bank, with the remainder to be paid with cash on hand.

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THE MERGER AGREEMENT

       The following summary of certain terms and provisions of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement, which is incorporated into this Proxy Statement/Prospectus by reference and, with the exception of exhibits and schedules to the Merger Agreement, is attached as Annex A to this Proxy Statement/Prospectus.

General

       The Merger Agreement provides for the merger of SHB with and into First Citizens, at which time the separate corporate existence of SHB will cease and First Citizens will be the surviving corporation. First Citizens will continue to exist as a Tennessee corporation. Southern Heritage Bank will become a wholly-owned subsidiary of First Citizens. Subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, the merger will become effective upon the filing of the articles of merger in the office of the Secretary of State of Tennessee in accordance with the Tennessee Business Corporation Act. See “THE MERGER AGREEMENT - Conditions to the Merger.” On June 27, 2014, First Citizens and SHB amended the Merger Agreement to correct a clerical error in the amount to be paid to SHB’s shareholders for fractional shares. On August 14, 2014, First Citizens and SHB further amended the Merger Agreement to extend the date upon which the merger must be completed from September 30, 2014 to October 30, 2014, and to provide that the mailing of letters of transmittal and election forms to SHB shareholders by the exchange agent will occur on or immediately following the meeting date of SHB shareholders and that the elections form must be returned by SHB shareholders within fifteen days of such mailing date in order to be considered timely. See Annex A to this Proxy Statement/Prospectus for a copy of the First and Second Amendments to the Merger Agreement.

       The merger will have the effects set forth in Section 48-21-108 of the Tennessee Business Corporation Act.

       During a special meeting on July 16, 2014, First Citizens’ shareholders voted on and approved the First Citizens Charter Amendment authorizing an additional class of common stock (Class A common stock) and a reclassification of First Citizens’ outstanding common stock. Upon the filing of the First Citizens Charter Amendment, each share of First Citizens common stock outstanding immediately prior to such filing owned by a shareholder of record who owned between one and 299 shares of such common stock was, by virtue of the filing of the First Citizens Charter Amendment and without any action on the part of the holders, reclassified as Class A common stock, on the basis of one share of Class A common stock per each share of common stock so reclassified. Each share of First Citizens common stock outstanding immediately prior to the filing of the First Citizens Charter Amendment owned by a shareholder of record who owned 300 or more shares of such common stock was not reclassified and continued to be classified as common stock. The First Citizens common stock continues to have unlimited voting rights. The First Citizens Class A common stock has no voting rights, except as may be required by law.

       First Citizens’ charter, as amended, in effect as of the effective time of the merger will be the charter of the surviving corporation. First Citizens’ bylaws, as amended, in effect as of the effective time of the merger will be the bylaws of the surviving corporation.

Terms of the Merger

       Under the terms of the Merger Agreement, if the Merger Agreement is approved and the merger is completed, all outstanding shares of SHB stock will be canceled and converted into the right to receive an aggregate of (i) $16,085,903.75 in cash and (ii) shares of First Citizens stock in the amounts as follows: 269,302 shares of First Citizens common stock, no par value per share and 108,356 shares of First Citizens Class A common stock, no par value per share, subject to adjustments as provided in the Merger Agreement and further described herein.

       The Merger Agreement provides that, at the effective time of the merger, each share of SHB stock issued and outstanding immediately prior to the effective time of the merger will, subject to the election set forth below, be converted into the right to receive (i) $12.25 in cash, plus (ii) 0.2876 of a share of First Citizens stock. The amount of per share merger consideration is subject to adjustment as provided in the Merger Agreement and further described herein. The SHB shareholders who hold SHB common stock, $1.00 par value per share, will receive First Citizens common stock and the SHB shareholders who hold (i) SHB Class A common stock, $1.00 par value per share, (ii) SHB Class B common stock, $1.00 par value per share, or (iii) SHB Series A preferred stock, no par value per share, will receive First Citizens Class A common stock.

       Under the terms of the Merger Agreement, shareholders of SHB who hold more than one share of SHB stock may elect to receive consideration in exchange for each share of SHB common stock in the form of: (a) 0.5751 shares of First Citizens stock or (b) $24.50 in cash, as subject to adjustment pursuant to the merger consideration adjustments as provided in the Merger Agreement and further described herein.

       The allocation of the total form of consideration and the total and per share consideration amount is subject to proration and adjustment under certain circumstances as provided in the Merger Agreement, including the requirement that SHB have a certain minimum net worth at closing and an adjustment for SHB’s Accumulated Other Comprehensive Income (Loss) if

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applicable. Shareholders may not receive the form of consideration they elect. The exchange agent under the Merger Agreement will effectuate the allocation among the shareholders of the right to receive the stock consideration, the cash consideration or a combination of both the stock consideration and the cash consideration in the merger in accordance with the adjustments set forth in the Merger Agreement.

       On the closing date, the Minimum Net Worth (as defined in the Merger Agreement) of SHB is required to be an amount greater than or equal to $22,863,000. If the estimated closing equity balance of SHB, to be delivered by SHB to First Citizens not more than 15 business days prior to the closing date, is less than the Minimum Net Worth, the cash consideration will be reduced by an amount equal to the difference between the estimated closing equity balance of SHB and the Minimum Net Worth.

       If the closing were to have occurred on August 15, 2014, the latest practicable date prior to the date of first mailing of this Proxy Statement/Prospectus, SHB’s closing net worth would have been 23,628,000, and there would accordingly have been no downward adjustment to the cash portion of the merger consideration, and SHB’s management expects that in the ordinary course of business, which SHB’s management believes will be the case, the closing equity at the date of determination will be greater than or equal to $22,863,000. However, in the event of an extraordinary set of circumstances which SHB’s management does not currently expect, SHB’s closing net worth could be significantly less than $22,863,000. In such extraordinary circumstances, and assuming First Citizens did not elect to exercise its right to terminate the Merger Agreement for breach of the representation of the absence of certain changes or events pursuant to the Merger Agreement, the per share merger consideration to SHB shareholders could be significantly lower than $24.50 per share, and if the closing equity were to drop to as low as $6,777,096.50, then SHB shareholders would receive no cash consideration and would receive only First Citizens stock for their SHB stock of 0.2876 shares of First Citizens stock for each share of SHB stock.

       In order for First Citizens to maintain satisfactory capital ratios, if, as of the closing date, SHB’s Accumulated Other Comprehensive Income (Loss) is a loss greater than $3,400,000, then First Citizens may, at the closing and in its sole discretion, increase the stock consideration and decrease the cash consideration so that the aggregate value of the shares of First Citizens stock, utilizing the First Citizens Measuring Price (as defined below), issued to the holders of SHB stock in connection with the merger is equal to up to 55% of the sum of (i) the aggregate value of the shares of First Citizens stock to be issued to the holders of SHB stock in connection with the merger utilizing the First Citizens Measuring Price and (ii) the aggregate cash value consideration. For the purposes of determining adjustments for Accumulated Other Comprehensive Income (Loss), the value of the stock consideration is determined by utilizing a value for the First Citizens common stock of $42.60 per share and a value for the First Citizens Class A common stock of $42.60 per share (the “First Citizens Measuring Price”). In the event that the stock consideration and cash consideration are adjusted for Accumulated Other Comprehensive Income (Loss), all references in the Merger Agreement to the “stock consideration” and the “cash consideration” will refer to the stock consideration and cash consideration as adjusted.

       At the effective time of the merger, each share of SHB stock held in treasury of SHB or owned by any direct or indirect wholly owned subsidiary of SHB immediately prior to the effective time of the merger (other than shares of SHB stock held (i) directly or indirectly in trust accounts, managed accounts and the like or otherwise held in a fiduciary capacity for the benefit of third parties (any such shares, whether held directly or indirectly, being referred to herein as “Trust Account Shares”) and (ii) by SHB or any of its subsidiaries in respect of a debt previously contracted (any such shares of SHB stock, whether held directly or indirectly (the “Treasury Shares”)), will be canceled and will cease to exist, and no First Citizens stock or other consideration will be delivered in exchange therefor. Any shares of First Citizens stock that are owned by SHB or any of its subsidiaries (other than shares of First Citizens stock held (i) directly or indirectly in trust accounts, managed accounts and the like or otherwise held in a fiduciary capacity for the benefit of third parties, and (ii) by SHB or any of its subsidiaries in respect of a debt previously contracted) shall become treasury stock of First Citizens.

       At the effective time of the merger, SHB shareholders, other than those who perfect dissenters’ rights in accordance with Tennessee law, will have no further rights as SHB shareholders, other than the right to receive their per share merger consideration.

       If, prior to the merger, shares of First Citizens stock are changed into a different number or class of shares as a result of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, or if a stock dividend is declared on the shares of First Citizens stock with a record date prior to the merger, the stock portion of the merger consideration will be adjusted accordingly.

Treatment of Options

       SHB has represented in the Merger Agreement that there are no outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of SHB common stock or SHB preferred stock or any other equity security or capital stock of SHB or any securities representing the right to purchase or otherwise receive any shares of SHB stock or any other equity security or capital stock of SHB.

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Exchange of Certificates in the Merger

       Before the effective time of the merger, First Citizens will appoint Computershare or another bank or trust company as an exchange agent to handle the exchange of SHB stock certificates for shares of First Citizens stock and the payment of cash for fractional shares. On or immediately following the meeting date of SHB shareholders, the exchange agent will send to each holder of record of shares of SHB stock as of the latest practicable date prior to the meeting of SHB shareholders a letter of transmittal, an election form and other appropriate materials for such holder to make a stock election, cash election, mixed election, or no election. SHB shareholders must return a completed election form to the exchange agent within 15 days of the mailing of the election form in order for the election form to be deemed timely. If no election form is received, or if an election form is received more than 15 days following mailing, the applicable SHB shareholder’s stock will be considered “non-election shares” and, in accordance with the terms of the Merger Agreement, such SHB shareholders will be entitled to receive cash consideration of $12.25 and stock consideration of 0.2876 of a share of First Citizens stock (plus cash in lieu of any fractional shares), subject to adjustment as described in the Merger Agreement. The letter of transmittal will contain instructions explaining the procedure for surrendering SHB stock certificates. You should not return certificates with the enclosed proxy card.

       SHB shareholders who surrender their stock certificates, together with a properly completed letter of transmittal and election form, will receive shares of First Citizens stock into which the shares of SHB stock were converted in the merger, cash, or a combination of both consistent with each shareholder’s election form except as such election may be modified consistent with the Merger Agreement. After the effective date of the merger, each certificate that previously represented shares of SHB stock will only represent the right to receive the shares of First Citizens stock, cash, or a combination of both (and cash in lieu of fractions thereof) into which those shares of SHB stock have been converted.

       If a certificate for SHB stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the Merger Agreement upon receipt of appropriate affidavit as to that loss, theft or destruction, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary indemnification.

Fractional Shares

       No fractional shares of First Citizens common stock will be issued in connection with the merger. Instead, SHB shareholders will receive, without interest, a cash payment from First Citizens equal to $42.60 multiplied by the fraction of a share of First Citizens stock to which the shareholder otherwise would be entitled.

Dividends and Distributions

       Until SHB stock certificates are surrendered for exchange, any dividends or other distributions declared after the effective time with respect to First Citizens common stock into which shares of SHB stock may have been converted will accrue but will not be paid. First Citizens will pay to former SHB shareholders any unpaid dividends or other distributions without interest only after they have duly surrendered their SHB stock certificates. After the effective time of the merger, there will be no transfers on the stock transfer books of SHB of any shares of SHB common or preferred stock. If certificates representing shares of SHB common or preferred stock are presented for transfer after the completion of the merger, they will be cancelled and exchanged for the merger consideration into which the shares of SHB common or preferred stock represented by that certificate have been converted.

Effective Time

       The merger will be completed when the articles of merger are filed with the Secretary of State of the State of Tennessee. First Citizens and SHB may, however, agree to a later time for completion of the merger and specify that time in the articles of merger. While we anticipate that the merger will be completed on or around October 1, 2014, completion of the merger could be delayed if there is a delay in obtaining the required regulatory approvals or in satisfying any other conditions to the merger. There can be no assurances as to whether, or when, First Citizens and SHB will obtain all of the required approvals or complete the merger. If the merger is not completed on or before October 30, 2014, either First Citizens or SHB may terminate the Merger Agreement, unless the failure to complete the merger by that date is due to the failure of the party seeking to terminate the Merger Agreement to perform its covenants and agreements in the Merger Agreement. See “THE MERGER AGREEMENT— Conditions to the Completion of the Merger”.

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Representations and Warranties

       The Merger Agreement contains a number of representations and warranties by SHB and First Citizens regarding aspects of their respective business, financial condition, structure and other facts pertinent to the merger that are customary for a transaction of this kind. They include, among other things, representations and warranties as to:

• the organization, existence, corporate power and authority of each company;
   
• the capitalization of each company;
   
• the absence of conflicts with and violations of law and various documents, contracts and agreements;
   
• the consents or approvals of or filings or registrations with any governmental authority or third party necessary in connection with the consummation of the merger;
   
• the filing of all reports, registrations and statements with applicable regulatory agencies;
   
• the fair presentation in all material respects of reports and financial statements provided to the other company;
   
• the absence of any broker’s or finder’s fees due in connection with the merger other than the brokers specifically identified in the Merger Agreement;
   
• the absence of any event or circumstance which is reasonably likely to have a material adverse effect;
   
• the absence of any proceedings pending, knowledge of any proceedings threatened, or knowledge of any basis for such proceedings to be brought;
   
• the absence of any knowledge that the merger will fail to qualify as a reorganization under Section 368(a) of the Code;
   
• the absence of any untrue statement of material fact or omission of a material fact necessary to make the statements contained in the Proxy Statement/Prospectus not misleading;
   
• the absence of regulatory actions pending, or to the knowledge of the companies, threatened against the companies or any of their respective subsidiaries by or before any governmental body or arbitrator having jurisdiction over the companies or their subsidiaries;
   
• the absence of any reason to believe required regulatory approvals will not be obtained;
   
• the adequacy and efficiency of insurance policies;
   
• compliance with the Bank Secrecy Act and Federal Community Reinvestment Act; and
   
• the accuracy of the statements contained in the Merger Agreement.

       The Merger Agreement also contains an additional warranty solely by First Citizens regarding First Citizens having sufficient funds and capitalization to enable First Citizens to timely pay the cash consideration and consummate the transactions contemplated by the Merger Agreement.

       The Merger Agreement also contains a number of additional representations and warranties solely by SHB regarding aspects of its business, financial condition, structure and other facts pertinent to the merger that are customary for a transaction of this kind. They include, among other things, representations and warranties as to:

• the timely filing and accuracy of tax returns and timely payment of taxes due and owing;
   
• compensation and the operation of all employee benefit plans in accordance with applicable law;
   
• the existence, performance and legal effect of certain contracts and commitments;
   
• the absence of any anti-takeover laws to which SHB or the merger may be subject;
   
• compliance with applicable environmental laws;
   
• loan portfolio matters;
   
• ownership of real and personal property;
   
• the absence of certain loans and related matters;
   
• matters related to the business and customer relationships of SHB and its subsidiaries;

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• maintenance of accurate books and records;
   
• ownership of intellectual property rights and the absence of actions for infringement of intellectual property;
   
• lack of knowledge of any plan or intention on the part of any shareholder of SHB to make written demand for payment of the fair value of such holder’s share of SHB stock; and
   
• participation in the SBLF Program.

       Most of the representations and warranties of the parties will be deemed to be true and correct if such representations are true and correct in all material respects, or, to the extent qualified as to materiality or “material adverse effect,” shall be true and correct in all respects subject to the applicable materiality qualification or unless the totality of facts, circumstances or events inconsistent with the representations or warranties has had or is reasonably likely to result in losses, damages, liabilities, costs, expenses, judgments or fines in amount of $750,000 or greater, or is materially adverse to (i) the business, condition, assets, properties, rights, prospects or results of operations of the party or its subsidiaries making the representations and warranties taken as a whole, or (ii) on the ability of the party and its subsidiaries to consummate the transactions contemplated by the Merger Agreement. In determining whether a material adverse effect has occurred or is reasonably likely, the parties will disregard any effects resulting from (1) any change in banking laws, rules or regulations of general applicability, (2) any change in GAAP or regulatory accounting principles applicable to banks or their holding companies generally, (3) any action or omission of a party or any subsidiary of that party taken with the express prior written consent of the other party, (4) general changes in national or Tennessee’s economic, monetary, market or financial conditions, including changes in prevailing interest rates, inflation, credit markets or capital market conditions, or in the industries in which each party operates, except, in all cases, to the extent such changes disproportionately affect that party, (5) changes in global or national political conditions, including the outbreak or escalation of acts of terrorism, or (6) the public disclosure of the Merger Agreement or the transactions contemplated by the Merger Agreement.

Conduct of Business Prior to the Merger and Other Covenants

       In the Merger Agreement, SHB agreed that, except as expressly contemplated or permitted by the Merger Agreement or with the prior written consent of First Citizens, SHB will carry on its business in the ordinary course consistent with past practice. Each of the parties also agreed to refrain from engaging in, or permitting its subsidiaries to engage in, certain activities which are described in the Merger Agreement.

       SHB has agreed to refrain, among other things, from:

• declaring or paying any dividends on, or making other distributions in respect of, any of its capital stock during any period, other than its normal annual dividend consistent with past practices (not to exceed $550,000) and dividends or distributions by a subsidiary of SHB to SHB;
   
• repurchasing, redeeming or otherwise acquiring (except for the redemption or repurchase of the Series D preferred stock) any shares of SHB stock or of any SHB subsidiary; splitting, combining or reclassifying any shares of SHB stock; or splitting, combining or reclassifying any shares of the capital stock of SHB or its subsidiaries; or issuing, delivering, selling or authorizing or proposing the issuance, delivery or sale of any shares of the SHB capital stock or any securities convertible into or exercisable for, or any rights, warrants or options to acquire any such shares;
   
• amending any provision of the charter, bylaws or similar governing documents of SHB;
   
• making capital expenditures in excess of $100,000 in the aggregate;
   
• entering into any new line of business;
   
• making any equity investment in, or purchase outside of the ordinary course of business any property or assets of any other person, except as permitted by the Merger Agreement;
   
• taking any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in the Merger Agreement being or becoming untrue or in any of the conditions set forth in the Merger Agreement not being satisfied;
   
• changing its accounting methods, except as required by changes in GAAP or regulatory accounting principles;
   
• adopting, amending or terminating any employee benefit plan or any agreement, arrangement, plan or policy with one or more of its current or former directors, officers or employees;
   
• increasing in any manner the compensation or fringe benefits of any of its employees, directors or consultants other than in the ordinary course of business pursuant to policies currently in effect;

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• granting or awarding any stock options, stock appreciation rights, restricted stock, restricted stock units, performance units or shares of any other equity or equity-based awards;
   
• selling, leasing, encumbering, assigning or otherwise disposing of or agreeing to sell, lease, encumber, assign or otherwise dispose of any of its material assets, properties or other rights or agreements other than as in the ordinary course of business consistent with past practice;
   
• incurring any indebtedness outside the ordinary course of business for borrowed money or assuming, guaranteeing, endorsing or otherwise as an accommodation becoming responsible for the obligations of any other individual, corporation or other entity;
   
• filing an application to relocate or terminate the operations of any banking office of it or any of its subsidiaries;
   
• entering into, creating, renewing, amending, extending or terminating or giving notice of a proposed renewal, amendment, extension or termination of, any contract, agreement or lease for goods, services or office space to which SHB or any of its subsidiaries is a party or by which SHB or any of its subsidiaries or their respective properties is bound involving aggregate payment obligations in excess of $100,000 over the term of the agreement or contract, or amending or waiving the provisions of any confidentiality or standstill agreement to which SHB or any of its affiliates is a party as of the signing date of the Merger Agreement;
   
• taking any action or entering into any agreement that could reasonably be expected to jeopardize or materially delay the receipt of any required regulatory approvals;
   
• entering or committing to enter into any new loans outside the ordinary course of business, or in an amount in excess of $1,000,000, or renewing, or committing to renewing, any existing loans in a principal amount in excess of $1,000,000, without having provided prior written notice to First Citizens, or entering into new loan transactions subject to the requirements of Regulation O of the Federal Reserve Board in excess of $250,000 in the aggregate without having provided prior written notice to First Citizens;
   
• directly or indirectly soliciting, initiating, accepting or participating in any discussion relating to any business combination involving it or any or any offer to acquire all of or a substantial portion of its assets; or
   
• agreeing or committing to do any of the above listed items.

       SHB has agreed to, among other things:

• notify First Citizens in writing within two business days after receipt of any unsolicited acquisition proposal, provide reasonable detail as to the identity of the person making such acquisition proposal and immediately cease and cause to be terminated any existing activities, discussion, or negotiations with any person conducted that relate to any acquisition proposal;
   
• call and hold a meeting of its shareholders and, through its board of directors, to recommend the Merger Agreement and the transactions contemplated thereby for approval to its shareholders;
   
• furnish First Citizens with all information concerning SHB or any of its subsidiaries required for inclusion in any regulatory applications or SEC filings;
   
• furnish First Citizens with copies of written communications received by SHB or any of its subsidiaries from or delivered by any governmental entity in respect of the transactions contemplated by the Merger Agreement;
   
• use its commercially reasonable best efforts to obtain all third-party consents required under certain of its contracts; and
   
• use its commercially reasonable best efforts to cause the redemption of all outstanding Small Business Lending Fund securities.

       First Citizens has agreed to refrain, among other things, from:

• declaring or paying any dividends on, or making other distributions in respect of, any of its capital stock during any period, other than its normal quarterly dividends consistent with past practices and dividends or distributions by a subsidiary of First Citizens to First Citizens;
   
• repurchasing, redeeming or otherwise acquiring any shares of First Citizens stock or any First Citizens subsidiary; or issuing, delivering, selling or authorizing or proposing the issuance, delivery or sale of any shares of the First Citizens capital stock or any securities convertible into or exercisable for, or any rights, warrants or options to acquire any such shares;

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• amending any provision of the charter, bylaws or similar governing documents of First Citizens, other than the First Citizens Charter Amendment as described in the Merger Agreement and herein;
   
• taking any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in the Merger Agreement from being or becoming untrue or in any of the conditions set forth in the Merger Agreement not being satisfied;
   
• taking any action or entering into any agreement that could reasonably be expected to jeopardize or materially delay the receipt of any required regulatory approvals;
   
• changing its accounting methods, except as required by changes in GAAP or regulatory accounting principles; or
   
• agreeing or committing to do any of the above listed items.

       First Citizens has agreed to, among other things:

• prepare and file all necessary regulatory filings and take all reasonable action to aid and assist in the consummation of the merger; and provide copies of such regulatory filings to SHB for which confidential treatment has not been requested;
   
• prepare and file with the SEC this Proxy Statement/Prospectus and any other applicable documents necessary to cause this Proxy Statement/Prospectus to become effective;
   
• furnish SHB with all information concerning First Citizens or any of its subsidiaries required for inclusion in any regulatory applications or SEC filings;
   
• furnish SHB with copies of written communications received by First Citizens or any of its subsidiaries from or delivered by any governmental entity in respect of the transactions contemplated by the Merger Agreement; and
   
• under certain conditions and time limits per the terms of the Merger Agreement, indemnify and hold harmless each present director and officer and certain affiliates of SHB.

       The Merger Agreement also contains other agreements relating to the conduct of the parties prior to the merger, including, among other things, those requiring each party to:

• take all actions required to comply with any legal requirements to complete the merger;
   
• afford to the other party and its representatives access during normal business hours to all of such party’s information concerning its business, properties and personnel as the other party may reasonably request;
   
• provide prompt notice of any event or circumstance that could cause any of its representations or warranties to be false or misleading in any material respect after the date of the signing of the Merger Agreement or that may cause any condition set forth in the Merger Agreement to not be satisfied in anticipation of the closing date of the merger;
   
• cooperate as necessary in conjunction with all approvals, filings and other steps necessary to cause the consummation of the merger;
   
• use reasonable best efforts not to, and use reasonable best efforts not to permit any subsidiaries to, take any action that would reasonably be expected to prevent the merger from qualifying as a reorganization with the meaning of 368(a) of the Code; and
   
• not to issue any publication, press release or public announcement with respect to the transactions contemplated by the Merger Agreement without the consent of the other party, except as otherwise required by law.

       First Citizens has agreed to cause the employees of SHB and its subsidiaries, at the discretion of First Citizens, to either continue to participate in the SHB employee plans, or, to the extent permissible under the First Citizen plans, become eligible to participate in First Citizens’ employee benefit plans in which similarly situated employees of First Citizens or its subsidiaries participate, to the same extent as similarly situated employees of First Citizens or its subsidiaries with some exceptions as provided in the Merger Agreement. With respect to each First Citizens plan that is an employee benefit plan, for purposes of determining eligibility to participate and entitlement benefits, service with SHB will be treated as service with First Citizens; provided, however, that such service will not be recognized to the extent that such recognition would result in a duplication or increase of benefits; provided, further, that past service credit shall not be taken into account for determining eligibility, vesting or accrual of benefits under any First Citizens