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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2009.
 or
 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission
File Number 001-33063
 CITIZENS REPUBLIC BANCORP, INC.
  MICHIGAN
    
    38-2378932(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)328 S. Saginaw Street, Flint, Michigan
    
    48502(Address of principal executive offices)
    
    (Zip Code)
  Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of exchange on which registeredCommon Stock, no par value
    
    The NASDAQ Global Select Market®7.50% Trust Preferred Securities (issued by Citizens Funding Trust I)
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: none
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



CITIZENS REPUBLIC BANCORP, INC.
2009 Annual Report on Form 10-K
 TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    13Item 1B. Unresolved Staff Comments
    
    
    25Item 2. Properties
    
    
    25Item 3. Legal Proceedings
    
    
    25PART IIItem 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    26Item 6. Selected Financial Data
    
    
    28Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    67Item 8. Financial Statements and Supplementary Data
    
    
    68Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    116Item 9A. Controls and Procedures
    
    
    116Item 9B. Other Information
    
    
    119PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    119Item 11. Executive Compensation
    
    
    119Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    119Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    120Item 14. Principal Accounting Fees and Services
    
    
    120PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    121SIGNATURES
    
    
    122EXHIBIT INDEX
    
    
    124EX-10.55EX-10.56EX-12.1EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1EX-99.2
  2




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PART I
 
 ITEM 1. BUSINESS
 ® www.citizensbanking.com www.sec.gov.
 GENERAL
   Total
    
    
    DatePrincipal
    
    
    Number of

    
    
    Assets
    
    
    Acquired /Subsidiary
    
    Office
    
    
    Offices
    
    
    (in millions)
    
    
    EstablishedCitizens Bank (1)
    
    Flint, MI
    
    
    219
    
    
    $
    11,318.5
    
    
    
    1871F&M Bank  Iowa (1)
    
    Marshalltown, IA
    
    
    10
    
    
    
    467.9
    
    
    
    11/01/99Citizens Bank Wealth Management, N.A.
    
    Flint, MI
    
    
    (2)
    
    
    
    (2)
    
    
    
    03/01/02
 
 (1)
    
    Consolidated totals include its non-bank subsidiaries. F&M had total trust assets under administration of $22.8 million at December
31, 2009. Citizens signed an agreement on January 29, 2010 to sell F&M. See Recent Developments.(2)
    
    Citizens Bank Wealth Management, N.A. conducts business at most Citizens Bank locations and had total assets under administration of $2.1
billion at December 31, 2009. RECENT DEVELOPMENTS
  3




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GEOGRAPHIC LOCATIONS
  PRINCIPAL SOURCES OF REVENUE
  Year Ended December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Interest and fees on loans
    
    $
    456,347
    
    
    $
    586,073
    
    
    $
    684,047Interest and dividends on investment securities, money
market investments, FHLB and Federal Reserve stock
    
    
    112,332
    
    
    
    114,838
    
    
    
    123,864Noninterest income
    
    
    67,421
    
    
    
    101,742
    
    
    
    122,568Total revenues
    
    $
    636,100
    
    
    $
    802,653
    
    
    $
    930,479
  LINES OF BUSINESS
  4




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COMPETITION
     SUPERVISION AND REGULATION
 General
   5




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Payment of Dividends
     6




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Capital Adequacy and Prompt Corrective Action
     
    
    prohibiting the payment of principal and interest on subordinated debt;
    
    prohibiting the holding company from making distributions without prior regulatory
approval;
    
    placing limits on asset growth and restrictions on activities;
    
    placing additional restrictions on transactions with affiliates;
    
    restricting the interest rate the institution may pay on deposits;
    
    prohibiting the institution from accepting deposits from correspondent banks; and
    
    in the most severe cases, appointing a conservator or receiver for the institution.
   7




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FDIC Insurance Assessments
   Temporary Liquidity Guarantee Program
  Interstate Banking
  Transactions with Affiliates
  8




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Loans to Insiders
  Community Reinvestment Act
  Fair Lending and Consumer Laws
    Gramm-Leach-Bliley Act of 1999
   9




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Anti-Money Laundering and the USA Patriot Act of 2001
   EESA and Troubled Asset Relief Capital Purchase Program
  10




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American Recovery and Reinvestment Act
    11




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Proposed Regulatory Reform
       12




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Potential Administrative Action
  ECONOMIC FACTORS AND MONETARY POLICY
  ENVIRONMENTAL MATTERS
  
 ITEM 1A. RISK FACTORS
  13




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We face the risk that loan losses, including unanticipated loan losses due to changes in loan
portfolios, fraud and economic factors, could exceed the allowance for loan losses and that
additional increases in the allowance will be required. Additions to the allowance for loan losses
would cause our net income to decline and could have a negative impact on our capital and financial
position.
  
    
    the duration of the loan;
    
    credit risks of a particular borrower;
    
    changes in economic and industry conditions; and
    
    in the case of a collateralized loan, the potential inadequacy of the value of the
collateral in the event of default, such as has resulted from the deterioration in commercial
and residential real estate values.
    14




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Our core lending and other businesses continue to be adversely affected by the historic weakness in
the national and regional economies in which we operate, particularly Michigan. Our ability to
generate earnings and maintain regulatory capital ratios at acceptable levels at our Holding
Company and the bank subsidiaries depends substantially on developments in those economies. Also,
our potential inability to comply with applicable laws, regulations and regulatory policies or
standards due to the effects of these conditions on our results of operations and financial
condition may result in heightened regulatory scrutiny and require us to take actions to protect
depositors that are not in the best interests of our shareholders.
  
    
    A substantial amount of our lending business originates in Michigan. Of our total
portfolio loans, approximately 70% are to borrowers located, or secured by properties, in
Michigan and approximately 10% are to borrowers located, or secured by properties, in Ohio.
These states have been severely and disproportionately affected by the economic downturn in
general, and by the bankruptcy filings of General Motors Corporation, Chrysler LLC and a
number of automobile parts suppliers in particular. Unemployment rates in these states have
been substantially higher than the national average and real estate collateral values have
fallen significantly.
    
    Our ability to return to a positive net income is largely dependent upon our future credit
costs. Our loan portfolios  particularly our commercial real estate and residential
mortgage loan portfolios, which have accounted for a disproportionate amount of our loan loss
provisions since the fourth quarter of 2008  continue to be adversely affected by economic
conditions and the on-going correction in real estate prices in our markets. A significant
portion of our commercial loan portfolio is classified as nonperforming loans or watchlist
loans. The latter are loans that have migrated within our loan rating system to a level that
requires increased oversight. We attempt to maintain an appropriate allowance for loan losses
to provide for potential losses in our loan portfolios. In view of the weakness and
uncertainties in the national and regional economies in which we operate and the inherent
difficulty in predicting future events, we may find it necessary to continue to take loan loss
provisions in future periods in amounts that substantially exceed loan loss provisions in
prior periods in order to maintain our allowance for loan losses at a level we deem
appropriate.
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Our business may be adversely affected by the highly regulated environment in which we operate.
Changes in applicable laws, regulations, and regulatory practices at either the federal or state
level may result in the imposition of additional costs or restrict our ability to operate our
business in the manner most beneficial to our shareholders.
    While we attempt to manage the risk from changes in market interest rates, interest rate risk
management techniques are not exact. In addition, we may not be able to economically hedge our
interest rate risk. A
 16




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rapid or substantial increase or decrease in interest rates could adversely
affect our net interest income and results of operations.
    The negative economic effects caused by terrorist attacks, potential attacks and other
destabilizing events would likely contribute to the deterioration of the quality of our loan
portfolio and could reduce our customer base, our level of deposits, and demand for our financial
products such as loans.
  If we are unable to continue to attract and retain core deposits, to obtain third party financing
on favorable terms, or to have access to interbank or other liquidity sources (as a result of
rating agency downgrades or other market factors), our cost of funds will increase, adversely
affecting the ability to generate the funds necessary for lending operations, reducing net interest
margin and negatively affecting results of operations.
  17




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Increased competition with other financial institutions or an adverse change in our relationship
with a number of major customers could reduce our net interest margin and net income by decreasing
the number and size of loans originated, the interest rates charged on these loans and the fees
charged for services to customers.
     Events such as significant adverse changes in the business climate, adverse action by a regulator,
unanticipated changes in the competitive environment, and a decision to change our operations or
dispose of an operating unit could have a negative effect on our goodwill or other intangible
assets such that we may need to record an impairment charge, which could have a material adverse
impact on our results of operations.
  18




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If the FDIC raises the assessment rate charged to its insured financial institutions, our FDIC
insurance premium may increase and this could have a negative effect on our expenses and results of
operations.
    We may not realize our deferred income tax assets and certain built-in losses.
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Our stock price can be volatile.
  
    
    Actual or anticipated negative variations in quarterly results of operations;
    
    Negative recommendations by securities analysts;
    
    Poor operating and stock price performance of other companies that investors deem
comparable to us;
    
    News reports relating to negative trends, concerns and other issues in the financial
services industry;
    
    Negative perceptions in the marketplace regarding us and/or our competitors;
    
    New technology used, or services offered, by competitors;
    
    Significant acquisitions or business combinations, strategic partnerships, joint ventures
or capital commitments by or involving us or our competitors;
    
    Our failure to integrate acquisitions or realize anticipated benefits from acquisitions;
    
    Adverse changes in government regulations;
    
    Delisting of our common stock from NASDAQ; and
    
    Geopolitical conditions such as acts or threats of terrorism or military conflicts.
  The trading volume in our common stock is less than that of other larger financial services
companies.
  If our common stock fails to meet the listing requirements of NASDAQ and is delisted from trading
on the NASDAQ, the market price of our common stock could be adversely affected.
  An investment in our common stock is not an insured deposit.
  20




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We may be adversely affected by the soundness of other financial institutions.
  We could face unanticipated environmental liabilities or costs related to real property owned or
acquired through foreclosure. Compliance with federal, state and local environmental laws and
regulations, including those related to investigation and clean-up of contaminated sites, could
have a negative effect on expenses and results of operations.
  We are party to various lawsuits incidental to our business. Litigation is subject to many
uncertainties such that the expenses and ultimate exposure with respect to many of these matters
cannot be ascertained.
  The financial services industry is undergoing rapid technological changes. If we are unable to
adequately invest in and implement new technology-driven products and services, we may not be able
to compete effectively, or the cost to provide products and services may increase significantly.
  The products and services offered by the banking industry and customer expectations regarding them
are subject to change. We attempt to respond to perceived customer needs and expectations by
offering new products and services, which are often costly to develop and market initially. A lack
of market acceptance of these products and services would have a negative effect on our financial
condition and results of operations.
 21




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As a bank holding company that conducts substantially all of our operations through our
subsidiaries, the ability of our Holding Company to pay dividends, repurchase our shares or to
repay our indebtedness depends upon the results of operations of our subsidiaries and their ability
to pay dividends to our Holding Company. Dividends paid by these subsidiaries are subject to
limits imposed by federal and state law.
     In order to maintain and strengthen our capital base, we may need to raise additional capital in
transactions that may be highly dilutive to our common shareholders. If such capital becomes
needed, our failure to raise additional capital could have serious consequences for our business.
  22




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Our Holding Company may not have sufficient resources to make capital contributions to our bank
subsidiaries if required by bank regulatory agencies, or if we might otherwise wish to do so, in
order to maintain the bank subsidiaries capital ratios at acceptable levels.
  We may not be able to attract and retain skilled people. If we were to lose key employees, we may
experience a disruption our relationship with certain customers.
   New accounting or tax pronouncements or interpretations may be issued by the accounting profession,
regulators or other government bodies which could change existing accounting methods. Changes in
accounting methods could negatively impact our results of operations and financial condition.
  23




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Our business continuity plans or data security systems could prove to be inadequate, resulting in a
material interruption in, or disruption to, our business and a negative impact on our results of
operations.
  Our vendors could fail to fulfill their contractual obligations, resulting in a material
interruption in, or disruption to, our business and a negative impact on our results of operations.
   
    
    If an existing agreement expires or a certain service is discontinued by a vendor, then we
may not be able to continue to offer our customers the same breadth of products and our
operating results would likely suffer unless we are able to find an alternate supply of a
similar service.
    
    Agreements we may negotiate in the future may commit us to certain minimum spending
obligations. It is possible we will not be able to create the market demand to meet such
obligations.
    
    If market demand for our products increases suddenly, our current vendors might not be able
to fulfill our commercial needs, which would require us to seek new arrangements or new
sources of supply, and may result in substantial delays in meeting market demand.
    
    We may not be able to control or adequately monitor the quality of services we receive from
our vendors. Poor quality services could damage our reputation with our customers.
  Our potential inability to integrate companies we may acquire in the future could have a negative
effect on our expenses and results of operations.
  24




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Our controls and procedures may fail or be circumvented which could have a material adverse
effect on our business, results of operations and financial condition.
  Our articles of incorporation and bylaws as well as certain banking laws may have an anti-takeover
effect.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
   25




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
   Dividends
    
    
    Common StockDeclared
    
    
    Price Range
    
    ClosingPer Share
    
    
    High
    
    
    Low
    
    Price2009First quarter
    
    $
    
    
    
    $
    3.26
    
    
    $
    0.65
    
    
    $
    1.55Second quarter
    
    
    
    
    
    
    2.25
    
    
    
    0.71
    
    
    
    0.71Third quarter
    
    
    
    
    
    
    1.18
    
    
    
    0.50
    
    
    
    0.76Fourth quarter
    
    
    
    
    
    
    0.78
    
    
    
    0.48
    
    
    
    0.69Year
    
    $
    
    
    
    $
    3.26
    
    
    $
    0.48
    
    
    $
    0.692008First quarter
    
    $
    0.290
    
    
    $
    14.74
    
    
    $
    10.41
    
    
    $
    12.43Second quarter
    
    
    
    
    
    
    13.97
    
    
    
    2.67
    
    
    
    2.82Third quarter
    
    
    
    
    
    
    11.00
    
    
    
    1.75
    
    
    
    3.08Fourth quarter
    
    
    
    
    
    
    4.75
    
    
    
    1.34
    
    
    
    2.98Year
    
    $
    0.290
    
    
    $
    14.74
    
    
    $
    1.34
    
    
    $
    2.98
  Stock Performance Graph
  26




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*
    
    KBW50 Index was discontinued effective 12/31/2009.  Issuer Repurchases of Equity Securities
 Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares That May YetPart of Publicly
    
    
    Be Purchased UnderTotal Number of
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    The Plans or ProgramsPeriod
    
    Shares Purchased
    
    
    Per Share
    
    
    Programs
    
    
    (2)October 2009
    
    
    940
    (1)
    
    
    0.71
    
    
    
    
    
    
    
    1,241,154November 2009
    
    
    2,434
    (1)
    
    
    0.76
    
    
    
    
    
    
    
    1,241,154December 2009
    
    
    871
    (1)
    
    
    0.61
    
    
    
    
    
    
    
    1,241,154Total
    
    
    4,245
    
    
    
    0.72
    
    
    
    
    
    
    
    1,241,154
 
 (1)
    
    Shares repurchased in connection with taxes due from employees as a result of the
vesting of certain restricted share awards in accordance with the related grant agreements. These
repurchases were not part of the repurchase program approved in October 2003.(2)
    
    In October 2003, the Board of Directors approved the repurchase of 3,000,000 shares
of common stock from time to time in the market. There is no expiration date for the repurchase
program. The repurchase of shares is generally prohibited, with certain exceptions, by the CPP
Letter
Agreement while Treasury continues to hold the related TARP Preferred Stock and by the terms of
Citizens outstanding trust preferred securities, and is also subject to limitations that may be
imposed by applicable securities laws and regulations and the rules of NASDAQ. The timing of the
purchases and the number of shares to be bought at any one time also depend on market conditions
and Citizens capital requirements. There can be no assurance that Citizens will repurchase the
remaining shares authorized to be repurchased  27




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ITEM 6. SELECTED FINANCIAL DATA
   28




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Five Year Summary of Selected Financial Data(in thousands, except per share data)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005For The YearNet interest income
    
    $
    317,368
    
    
    $
    348,932
    
    
    $
    382,179
    
    
    $
    263,120
    
    
    $
    275,749Provision for loan losses(1)
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177
    
    
    
    11,265
    
    
    
    1,109Noninterest income(2)
    
    
    67,421
    
    
    
    101,742
    
    
    
    122,568
    
    
    
    90,627
    
    
    
    80,508Noninterest expense(3)
    
    
    603,021
    
    
    
    490,702
    
    
    
    327,423
    
    
    
    259,827
    
    
    
    243,042Income tax (benefit) provision(4)
    
    
    (29,974
    )
    
    
    70,970
    
    
    
    31,305
    
    
    
    19,319
    
    
    
    31,581Net (loss) income
    
    
    (514,213
    )
    
    
    (393,052
    )
    
    
    100,842
    
    
    
    63,336
    
    
    
    80,525Net (loss) income attributable to common shareholders(5)
    
    
    (533,990
    )
    
    
    (405,016
    )
    
    
    100,842
    
    
    
    63,336
    
    
    
    80,525Taxable equivalent adjustment
    
    
    16,450
    
    
    
    18,402
    
    
    
    18,547
    
    
    
    13,717
    
    
    
    13,392Cash dividends
    
    
    
    
    
    
    21,959
    
    
    
    87,798
    
    
    
    49,530
    
    
    
    49,311Per Common Share DataNet income (loss):Basic
    
    $
    (2.75
    )
    
    $
    (4.30
    )
    
    $
    1.33
    
    
    $
    1.48
    
    
    $
    1.87Diluted
    
    
    (2.75
    )
    
    
    (4.30
    )
    
    
    1.33
    
    
    
    1.47
    
    
    
    1.85Cash dividends
    
    
    
    
    
    
    0.290
    
    
    
    1.160
    
    
    
    1.155
    
    
    
    1.140Market value
    
    
    0.69
    
    
    
    2.98
    
    
    
    14.51
    
    
    
    26.50
    
    
    
    27.75Common book value
    
    
    2.69
    
    
    
    10.60
    
    
    
    20.84
    
    
    
    20.58
    
    
    
    15.28Tangible book value(6)
    
    
    2.50
    
    
    
    7.80
    
    
    
    10.20
    
    
    
    9.65
    
    
    
    13.75Tangible common book value(7)
    
    
    1.81
    
    
    
    5.69
    
    
    
    10.20
    
    
    
    9.65
    
    
    
    13.75Shares outstanding
    
    
    394,397
    
    
    
    125,997
    
    
    
    75,722
    
    
    
    75,676
    
    
    
    42,968At Year EndAssets
    
    $
    11,931,631
    
    
    $
    13,086,016
    
    
    $
    13,505,983
    
    
    $
    14,002,612
    
    
    $
    7,750,688Total earning assets
    
    
    11,169,458
    
    
    
    11,973,735
    
    
    
    11,969,389
    
    
    
    12,483,630
    
    
    
    7,274,057Portfolio loans
    
    
    7,905,859
    
    
    
    9,102,598
    
    
    
    9,501,244
    
    
    
    9,231,082
    
    
    
    5,616,119Allowance for loan losses
    
    
    342,370
    
    
    
    255,321
    
    
    
    163,353
    
    
    
    169,104
    
    
    
    116,400Deposits
    
    
    8,909,340
    
    
    
    9,052,406
    
    
    
    8,301,925
    
    
    
    8,698,061
    
    
    
    5,473,839Shareholders equity
    
    
    1,331,036
    
    
    
    1,601,321
    
    
    
    1,577,880
    
    
    
    1,557,686
    
    
    
    656,463Average For The YearAssets
    
    $
    12,483,109
    
    
    $
    13,241,553
    
    
    $
    13,320,121
    
    
    $
    7,704,231
    
    
    $
    7,776,522Total earning assets
    
    
    11,555,721
    
    
    
    11,888,252
    
    
    
    11,847,221
    
    
    
    7,259,956
    
    
    
    7,338,328Portfolio loans
    
    
    8,473,946
    
    
    
    9,433,952
    
    
    
    9,212,066
    
    
    
    5,657,476
    
    
    
    5,493,280Allowance for loan losses
    
    
    306,971
    
    
    
    189,072
    
    
    
    173,148
    
    
    
    114,613
    
    
    
    119,925Deposits
    
    
    8,913,811
    
    
    
    8,715,210
    
    
    
    8,168,893
    
    
    
    5,587,967
    
    
    
    5,286,390Shareholders equity
    
    
    1,444,733
    
    
    
    1,558,414
    
    
    
    1,549,961
    
    
    
    660,996
    
    
    
    653,004Financial RatiosReturn on average assets
    
    
    (4.12)
    %
    
    
    (2.97
    )%
    
    
    0.76
    %
    
    
    0.82
    %
    
    
    1.04
    %Return on average shareholders equity
    
    
    (35.59
    )
    
    
    (25.22
    )
    
    
    6.51
    
    
    
    9.58
    
    
    
    12.33Average shareholders equity/avg. assets
    
    
    11.57
    
    
    
    11.77
    
    
    
    11.64
    
    
    
    8.58
    
    
    
    8.40Net interest margin (FTE)(8)
    
    
    2.89
    
    
    
    3.09
    
    
    
    3.38
    
    
    
    3.81
    
    
    
    3.94Efficiency ratio(9)
    
    
    83.88
    
    
    
    66.64
    
    
    
    62.57
    
    
    
    70.71
    
    
    
    65.75Allowance for loan losses as a percent of portfolio loans
    
    
    4.33
    
    
    
    2.80
    
    
    
    1.72
    
    
    
    1.83
    
    
    
    2.07Allowance for loan losses as a percent of nonperforming loans
    
    
    72.01
    
    
    
    83.43
    
    
    
    86.27
    
    
    
    286.44
    
    
    
    359.50Nonperforming loans as a percent of portfolio loans
    
    
    6.01
    
    
    
    3.36
    
    
    
    1.99
    
    
    
    0.64
    
    
    
    0.58Nonperforming assets as a percent of portfolio loans plus ORAA
    
    
    7.48
    
    
    
    4.79
    
    
    
    2.64
    
    
    
    1.10
    
    
    
    0.71Nonperforming assets as a percent of total assets
    
    
    4.99
    
    
    
    3.36
    
    
    
    1.86
    
    
    
    0.73
    
    
    
    0.51Net loans charged off as a percent of average portfolio loans
    
    
    2.82
    
    
    
    2.01
    
    
    
    0.55
    
    
    
    0.29
    
    
    
    0.13Tier 1 leverage(10)
    
    
    9.21
    
    
    
    9.66
    
    
    
    7.53
    
    
    
    7.22
    
    
    
    7.98Tier 1 risk-based capital
    
    
    12.52
    
    
    
    12.21
    
    
    
    9.18
    
    
    
    9.41
    
    
    
    9.94Total risk-based capital
    
    
    13.93
    
    
    
    14.49
    
    
    
    11.66
    
    
    
    11.90
    
    
    
    13.22
 
 (1)
    
    Provision for loan losses in 2005 includes a $9.1 million insurance settlement
relating to a claim for recovery of fraud losses suffered in connection with two loans made by the
Corporation and subsequently charged-off in 2002 and 2003.(2)
    
    Noninterest income includes a net loss on debt extinguishment of $15.9 million in
2009, a fair-value adjustment on loans held for sale of $20.1 million and $9.4 million in 2009 and
2008, respectively and a charge of $3.6 million related to a fair value change in CD swap
derivatives in 2005.(3)
    
    Noninterest expense includes goodwill impairment of $266.5 million and $178.1
million in 2009 and 2008, respectively; fair-value adjustments on ORE properties of $23.5
million and $8.1 million in 2009 and 2008, respectively; and restructuring and merger-related
expenses of $8.2 million in 2007 and $11.3 million in 2006, related to the Republic merger.(4)
    
    Income tax (benefit) provision includes a deferred tax valuation allowance of $79.8
million and $136.6 million in 2009 and 2008, respectively.(5)
    
    Net loss attributable to common shareholders includes the following items: $19.8
million dividend to preferred shareholders in 2009, $0.2 million dividend on redeemable preferred
stock and $11.7 million deemed dividend on convertible preferred stock in 2008.(6)
    
    Tangible book value is an estimate of a companys worth, if liquidated, to
shareholders. The calculation using ending balances is as follows: (Shareholders equity -
Goodwill - Intangible assets)/Common shares outstanding.(7)
    
    Tangible common book value is an estimate of a companys worth, if it was liquidated,
to common shareholders. The calculation using ending balances is as follows: (Shareholders equity
- Preferred stock - Goodwill - Intangible assets)/Common shares outstanding.(8)
    
    Net interest margin includes taxable equivalent adjustments to interest income based
on a tax rate of 35%.(9)
    
    Efficiency ratio is calculated as follows: (Noninterest expense -
Goodwill impairment)/(Net interest income + Taxable equivalent adjustment +
Noninterest income).(10)
    
    In 2006, the Tier 1 leverage is calculated using
ending assets instead of average assets due to the Republic merger on December 29,
2006. 29




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  ForwardLooking Statements
   OVERVIEW
 Nature of Citizens Business
   30




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##### Table of Contents



Use of Non-GAAP Financial Measures
  Net Interest Margin and Efficiency Ratio
  Tangible Equity, Tangible Common Equity and Tier 1 Common Equity Ratios
  31




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##### Table of Contents



Pre-tax Pre-Provision Core Operating Earnings
   32




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##### Table of Contents



Non-GAAP
Reconciliation
Citizens Republic Bancorp and Subsidiaries
 (in thousands)
    
    2009
    
    
    2008
    
    
    2007Net Interest Income (A)
    
    $
    317,368
    
    
    $
    348,932
    
    
    $
    382,179Taxable equivalent adjustment (B)
    
    
    16,450
    
    
    
    18,402
    
    
    
    18,547Noninterest income (C)
    
    
    67,421
    
    
    
    101,742
    
    
    
    122,568Noninterest expense (D)
    
    
    603,021
    
    
    
    490,702
    
    
    
    327,423Goodwill impairment (E)
    
    
    266,474
    
    
    
    178,089
    
    
    
    Efficiency Ratio: (D-E)/(A+B+C)
    
    
    83.88
    %
    
    
    66.64
    %
    
    
    62.57
    %Ending Balances(in millions)Tangible Common EquityTotal assets
    
    $
    11,932
    
    
    $
    13,086
    
    
    $
    13,506Goodwill
    
    
    (331
    )
    
    
    (597
    )
    
    
    (775
    )Other intangible assets
    
    
    (14
    )
    
    
    (21
    )
    
    
    (31
    )Tangible assets (non-GAAP)
    
    $
    11,587
    
    
    $
    12,468
    
    
    $
    12,700Total shareholders equity
    
    $
    1,331
    
    
    $
    1,601
    
    
    $
    1,578Goodwill
    
    
    (331
    )
    
    
    (597
    )
    
    
    (775
    )Other intangible assets
    
    
    (14
    )
    
    
    (21
    )
    
    
    (31
    )Tangible equity (non-GAAP)
    
    $
    986
    
    
    $
    983
    
    
    $
    772Tangible equity
    
    $
    986
    
    
    $
    983
    
    
    $
    772Preferred Stock
    
    
    (272
    )
    
    
    (266
    )
    
    
    Tangible common equity (non-GAAP)
    
    $
    714
    
    
    $
    717
    
    
    $
    772Tier 1 Common EquityTotal shareholders equity
    
    $
    1,331
    
    
    $
    1,601
    
    
    $
    1,578Qualifying capital securities
    
    
    73
    
    
    
    174
    
    
    
    175Goodwill
    
    
    (331
    )
    
    
    (597
    )
    
    
    (775
    )Accumulated other comprehensive loss (income)
    
    
    7
    
    
    
    50
    
    
    
    (5
    )Other intangible assets
    
    
    (14
    )
    
    
    (21
    )
    
    
    (31
    )Tier 1 capital (regulatory)
    
    $
    1,066
    
    
    $
    1,207
    
    
    $
    942Tier 1 capital (regulatory)
    
    $
    1,066
    
    
    $
    1,207
    
    
    $
    942Qualifying capital securities
    
    
    (73
    )
    
    
    (174
    )
    
    
    (175
    )Preferred Stock
    
    
    (272
    )
    
    
    (266
    )
    
    
    Total Tier 1 common equity (non-GAAP)
    
    $
    721
    
    
    $
    767
    
    
    $
    767Net risk-weighted assets (regulatory)
    
    $
    8,516
    
    
    $
    9,883
    
    
    $
    10,258Equity to Assets
    
    
    11.16
    %
    
    
    12.24
    %
    
    
    11.68
    %Tangible Equity to Tangible Assets
    
    
    8.51
    
    
    
    7.88
    
    
    
    6.08Tangible Common Equity to Tangible Assets
    
    
    6.16
    
    
    
    5.75
    
    
    
    6.08Tier 1 Common Equity
    
    
    8.47
    
    
    
    7.76
    
    
    
    7.48
 33




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Performance Summary
  Three Year Summary of Net Income Components
 (in thousands)
    
    2009
    
    
    2008
    
    
    2007Interest income
    
    $
    568,679
    
    
    $
    700,911
    
    
    $
    807,911Interest expense
    
    
    251,311
    
    
    
    351,979
    
    
    
    425,732Net interest income
    
    
    317,368
    
    
    
    348,932
    
    
    
    382,179Provision for loan losses
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177Noninterest income
    
    
    67,421
    
    
    
    101,742
    
    
    
    122,568Noninterest expense
    
    
    603,021
    
    
    
    490,702
    
    
    
    327,423Income tax (benefit) provision
    
    
    (29,974
    )
    
    
    70,970
    
    
    
    31,305Net (loss) income
    
    
    (514,213
    )
    
    
    (393,052
    )
    
    
    100,842Deemed dividend on convertible preferred stock
    
    
    
    
    
    
    (11,737
    )
    
    
    Dividend on redeemable preferred stock
    
    
    (19,777
    )
    
    
    (227
    )
    
    
    Net (loss) income attributable to common shareholders
    
    $
    (533,990
    )
    
    $
    (405,016
    )
    
    $
    100,842Pre-tax pre-provision core operating earningsNet (loss) income
    
    $
    (514,213
    )
    
    $
    (393,052
    )
    
    $
    100,842Income tax (benefit) provision
    
    
    (29,974
    )
    
    
    70,970
    
    
    
    31,305Provision for loan losses
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177Goodwill impairment
    
    
    266,474
    
    
    
    178,089
    
    
    
    Net loss on debt extinguishment
    
    
    15,929
    
    
    
    
    
    
    
    FDIC special assessment
    
    
    5,533
    
    
    
    
    
    
    
    Fair value adjustment on loans held for sale
    
    
    20,086
    
    
    
    9,373
    
    
    
    508Fair value adjustment on ORE
    
    
    23,453
    
    
    
    8,063
    
    
    
    (866
    )Fair value adjustment on bank owned life insurance
    
    
    (144
    )
    
    
    3,447
    
    
    
    Loss on auction rate securities repurchase
    
    
    
    
    
    
    2,406
    
    
    
    (Gain) loss related to Visa USA shares
    
    
    
    
    
    
    (2,124
    )
    
    
    872Fair value adjustment on swaps
    
    
    606
    
    
    
    (1,287
    )
    
    
    Captive insurance impairment charge
    
    
    
    
    
    
    1,053
    
    
    
    Expenses
related to merger activities but not treated as restructuring or merger-related
    
    
    
    
    
    
    
    
    
    
    10,142Restructuring and merger related expenses
    
    
    
    
    
    
    
    
    
    
    8,247Loss on 1998 venture capital investment in limited partnership
    
    
    
    
    
    
    
    
    
    
    1,085Pre-tax pre-provision core operating earnings
    
    $
    113,705
    
    
    $
    158,992
    
    
    $
    197,312
  
    
    The decrease in net interest income from 2008 was primarily a result of a decline in net
interest margin from 3.09% to 2.89% and a $332.5 million decrease in average earning assets.
The decrease in the net interest margin was primarily the result of deposit price competition,
the transfer of loans to nonperforming status, and an increase in short-term investments to
provide additional on-balance sheet liquidity. The decrease was partially offset by expanding
commercial and consumer loan spreads and retail time deposits repricing to a lower rate. The
decrease in average earning assets was primarily the result of lower loan demand in the
current Midwest economic environment, partially offset by an increase in investment securities
and money market investments.
 
    
    The increase in the provision for loan losses over 2008 was primarily a result of higher
net charge-offs and the continued migration of commercial real estate and residential mortgage
loans to nonperforming status during 2009. Total net charge-offs increased $48.8 million or
25.7% over 2008 to 2.82% of average portfolio
 34




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loans outstanding compared with 2.01% for 2008.
The increase was primarily the result of higher charge-offs on commercial and industrial loans
related to stress on the automotive industry in 2009.
    
    The decrease in noninterest income from 2008 was primarily due to a net loss on debt
extinguishment ($15.9 million) in connection with the exchange offers completed in the third
quarter of 2009 and higher net losses on loans held for sale ($10.7 million), as well as lower
service charges on deposit accounts ($3.5 million), and lower trust fees ($2.9 million).
    
    The increase in noninterest expense over 2008 was primarily the result of a higher goodwill
impairment charge ($88.4 million), as well as higher other expense ($20.3 million), Other Real
Estate (ORE) expense and losses ($16.8 million), and other loan expense ($11.5 million),
partially offset by lower salaries and employee benefits ($19.0 million) and a net decline in
all other noninterest expense categories.
    
    The decrease in the income tax expense from 2008 was primarily the result of recording a
valuation allowance against deferred tax assets during the fourth quarter of 2008, as well as
recognizing the tax impact of changes in other comprehensive income during 2009.
    
    The decrease in pre-tax pre-provision core operating earnings from 2008 was primarily the
result of lower net interest income (primarily due to a decline in average earning assets),
lower noninterest income (primarily due to reductions in most categories) and higher
noninterest expense (due to higher FDIC insurance premiums). The increase in noninterest
expense was partially offset by various expense management initiatives implemented throughout
the company.
   CRITICAL ACCOUNTING POLICIES
  Allowance for Loan Losses
  35




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36




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Goodwill
     37




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##### Table of Contents



Fair Value Measurements
  Pension and Postretirement Benefits
  38




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Income Taxes
   39




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##### Table of Contents



Derivative Financial Instruments and Hedging Activities
  RECENT ACCOUNTING PRONOUNCEMENTS
  SUBSEQUENT EVENTS
    SIGNIFICANT DEVELOPMENTS IN 2009
 Goodwill Impairment Charge
  Exchange of Common Stock for Long-Term Debt
  40




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SIGNIFICANT DEVELOPMENTS IN 2008 AND 2007
 Issuances of Capital in 2008
    Goodwill Impairment Charge
  Branch Consolidation and Sale
  Strategic Business Alliance for the Mortgage Operations and Secondary Marketing Functions
  RESULTS OF OPERATIONS
 NET INTEREST INCOME
  41




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##### Table of Contents



Average Balances/Net Interest Income/Average Rates
 2009

    
    

    2008
    
    
    2007Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(in thousands)
    
    Balance
    
    
    Interest(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Interest (1)
    
    
    Rate (2)
    
    
    Balance
    
    
    Interest (1)
    
    
    Rate (2)Earning AssetsMoney market investments
    
    $
    519,224
    
    
    $
    1,300
    
    
    
    0.25
    %
    
    $
    40,551
    
    
    $
    384
    
    
    
    0.95
    %
    
    $
    1,940
    
    
    $
    104
    
    
    
    5.37
    %Investment securities (3):Taxable
    
    
    1,715,605
    
    
    
    80,437
    
    
    
    4.69
    
    
    
    1,503,983
    
    
    
    78,089
    
    
    
    5.19
    
    
    
    1,726,042
    
    
    
    88,078
    
    
    
    5.10Tax-exempt
    
    
    617,070
    
    
    
    26,340
    
    
    
    6.57
    
    
    
    673,395
    
    
    
    29,096
    
    
    
    6.65
    
    
    
    671,753
    
    
    
    29,268
    
    
    
    6.70FHLB and Federal Reserve stock
    
    
    153,951
    
    
    
    4,255
    
    
    
    2.76
    
    
    
    148,806
    
    
    
    7,269
    
    
    
    4.89
    
    
    
    137,676
    
    
    
    6,414
    
    
    
    4.66Portfolio Loans (4):Commercial and industrial
    
    
    2,237,534
    
    
    
    103,434
    
    
    
    4.72
    
    
    
    2,656,982
    
    
    
    144,025
    
    
    
    5.52
    
    
    
    2,138,853
    
    
    
    155,182
    
    
    
    7.38Commercial real estate
    
    
    2,921,569
    
    
    
    154,991
    
    
    
    5.31
    
    
    
    3,104,815
    
    
    
    200,071
    
    
    
    6.45
    
    
    
    3,103,082
    
    
    
    238,240
    
    
    
    7.68Residential mortgage
    
    
    1,147,921
    
    
    
    57,819
    
    
    
    5.04
    
    
    
    1,334,706
    
    
    
    81,610
    
    
    
    6.11
    
    
    
    1,490,447
    
    
    
    98,678
    
    
    
    6.62Direct consumer
    
    
    1,355,078
    
    
    
    82,215
    
    
    
    6.07
    
    
    
    1,507,073
    
    
    
    101,509
    
    
    
    6.74
    
    
    
    1,638,084
    
    
    
    127,768
    
    
    
    7.80Indirect consumer
    
    
    811,844
    
    
    
    55,144
    
    
    
    6.79
    
    
    
    830,376
    
    
    
    56,067
    
    
    
    6.75
    
    
    
    841,600
    
    
    
    56,881
    
    
    
    6.76Total portfolio loans
    
    
    8,473,946
    
    
    
    453,603
    
    
    
    5.38
    
    
    
    9,433,952
    
    
    
    583,282
    
    
    
    6.21
    
    
    
    9,212,066
    
    
    
    676,749
    
    
    
    7.38Loans held for sale (4)
    
    
    75,925
    
    
    
    2,744
    
    
    
    3.61
    
    
    
    87,565
    
    
    
    2,791
    
    
    
    3.19
    
    
    
    97,744
    
    
    
    7,298
    
    
    
    7.42Total earning assets (3)
    
    
    11,555,721
    
    
    
    568,679
    
    
    
    5.06
    
    
    
    11,888,252
    
    
    
    700,911
    
    
    
    6.05
    
    
    
    11,847,221
    
    
    
    807,911
    
    
    
    6.98Nonearning AssetsCash and due from banks
    
    
    165,294
    
    
    
    
    
    
    
    
    
    
    
    203,431
    
    
    
    
    
    
    
    
    
    
    
    198,908Bank premises and equipment
    
    
    121,392
    
    
    
    
    
    
    
    
    
    
    
    126,255
    
    
    
    
    
    
    
    
    
    
    
    136,135Investment security
fair value adjustment
    
    
    24,524
    
    
    
    
    
    
    
    
    
    
    
    6,544
    
    
    
    
    
    
    
    
    
    
    
    3,879Other nonearning assets
    
    
    923,149
    
    
    
    
    
    
    
    
    
    
    
    1,206,143
    
    
    
    
    
    
    
    
    
    
    
    1,307,126Allowance for loan losses
    
    
    (306,971
    )
    
    
    
    
    
    
    
    
    
    
    (189,072
    )
    
    
    
    
    
    
    
    
    
    
    (173,148
    )Total assets
    
    $
    12,483,109
    
    
    
    
    
    
    
    
    
    
    $
    13,241,553
    
    
    
    
    
    
    
    
    
    
    $
    13,320,121Interest-Bearing LiabilitiesDeposits:Interest-bearing demand
    
    
    979,590
    
    
    
    4,226
    
    
    
    0.43
    
    
    
    771,735
    
    
    
    5,076
    
    
    
    0.66
    
    
    
    831,983
    
    
    
    5,742
    
    
    
    0.69Savings deposits
    
    
    2,610,246
    
    
    
    20,309
    
    
    
    0.78
    
    
    
    2,551,570
    
    
    
    44,046
    
    
    
    1.73
    
    
    
    2,188,296
    
    
    
    63,942
    
    
    
    2.92Time deposits
    
    
    4,097,896
    
    
    
    135,263
    
    
    
    3.30
    
    
    
    4,268,931
    
    
    
    171,761
    
    
    
    4.02
    
    
    
    4,008,919
    
    
    
    187,510
    
    
    
    4.68Short-term borrowings
    
    
    61,638
    
    
    
    227
    
    
    
    0.37
    
    
    
    317,404
    
    
    
    8,191
    
    
    
    2.58
    
    
    
    719,791
    
    
    
    34,700
    
    
    
    4.81Long-term debt
    
    
    1,904,955
    
    
    
    91,286
    
    
    
    4.79
    
    
    
    2,521,181
    
    
    
    122,905
    
    
    
    4.87
    
    
    
    2,729,476
    
    
    
    133,838
    
    
    
    4.90Total
interest-bearing liabilities
    
    
    9,654,325
    
    
    
    251,311
    
    
    
    2.60
    
    
    
    10,430,821
    
    
    
    351,979
    
    
    
    3.37
    
    
    
    10,478,465
    
    
    
    425,732
    
    
    
    4.06Noninterest-Bearing Liabilities and Shareholders EquityNoninterest-bearing demand
    
    
    1,226,079
    
    
    
    
    
    
    
    
    
    
    
    1,122,974
    
    
    
    
    
    
    
    
    
    
    
    1,139,695Other liabilities
    
    
    157,972
    
    
    
    
    
    
    
    
    
    
    
    129,344
    
    
    
    
    
    
    
    
    
    
    
    152,000Shareholders equity
    
    
    1,444,733
    
    
    
    
    
    
    
    
    
    
    
    1,558,414
    
    
    
    
    
    
    
    
    
    
    
    1,549,961Total
liabilities and shareholders equity
    
    $
    12,483,109
    
    
    
    
    
    
    
    
    
    
    $
    13,241,553
    
    
    
    
    
    
    
    
    
    
    $
    13,320,121Net Interest Income
    
    
    
    
    
    $
    317,368
    
    
    
    
    
    
    
    
    
    
    $
    348,932
    
    
    
    
    
    
    
    
    
    
    $
    382,179Interest Spread(5)
    
    
    
    
    
    
    
    
    
    
    2.46
    %
    
    
    
    
    
    
    
    
    
    
    2.68
    %
    
    
    
    
    
    
    
    
    
    
    2.92
    %Contribution of noninterest bearing sources of funds
    
    
    
    
    
    
    
    
    
    
    0.43
    
    
    
    
    
    
    
    
    
    
    
    0.41
    
    
    
    
    
    
    
    
    
    
    
    0.46Net Interest Margin(5)(6)
    
    
    
    
    
    
    
    
    
    
    2.89
    %
    
    
    
    
    
    
    
    
    
    
    3.09
    %
    
    
    
    
    
    
    
    
    
    
    3.38
    %
 
 (1)
    
    Interest income is shown on an unadjusted basis and therefore does not include
taxable equivalent adjustments.(2)
    
    Average rates are presented on an annual basis and include taxable equivalent
adjustments to interest income of $16.4 million, $18.4 million, and $18.5 million for the years
ended December 31, 2009, 2008, and 2007, repectively, based on a tax rate of 35%.(3)
    
    For presentation in this table, average balances and the corresponding average
rates for investment securities are based upon historical cost, adjusted for amortization of
premiums and accretion of discounts.(4)
    
    Nonaccrual loans are included in
average balances for each applicable loan category.(5)
    
The interest spread and net interest
margin are presented on a tax-equivalent basis.(6)
    
    Net interest margin exceeds the interest spread due to noninterest-bearing funding
sources, demand deposits, other liabilities and shareholders equity supporting earning assets. 2009 compared with 2008
  2008 compared with 2007
  42




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##### Table of Contents



Analysis of Changes in Interest Income and Interest Expense
 2009 Compared to 2008
    
    
    2008 Compared to 2007Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease)Net
    
    
    Due to Change in
    
    



    Net
    
    Due to Change in(in thousands)
    
    Change(1)
    
    
    Rate(2)
    
    
    Volume(2)
    
    
    Change(1)
    
    
    Rate (2)
    
    
    Volume(2)Interest Income on Earning Assets:Money market investments
    
    $
    916
    
    
    $
    (476
    )
    
    $
    1,392
    
    
    $
    280
    
    
    $
    (154
    )
    
    $
    434Investment securities:Taxable
    
    
    2,348
    
    
    
    (8,009
    )
    
    
    10,357
    
    
    
    (9,989
    )
    
    
    1,517
    
    
    
    (11,506
    )Tax-exempt
    
    
    (2,756
    )
    
    
    (348
    )
    
    
    (2,408
    )
    
    
    (172
    )
    
    
    (243
    )
    
    
    71FHLB and
Federal Reserve stock
    
    
    (3,014
    )
    
    
    (3,257
    )
    
    
    243
    
    
    
    855
    
    
    
    321
    
    
    
    534Loans:Commercial and industrial
    
    
    (40,591
    )
    
    
    (19,396
    )
    
    
    (21,195
    )
    
    
    (11,157
    )
    
    
    (44,331
    )
    
    
    33,174Commercial real estate
    
    
    (45,080
    )
    
    
    (33,662
    )
    
    
    (11,418
    )
    
    
    (38,169
    )
    
    
    (38,304
    )
    
    
    135Residential mortgage
    
    
    (23,791
    )
    
    
    (13,261
    )
    
    
    (10,530
    )
    
    
    (17,068
    )
    
    
    (7,212
    )
    
    
    (9,856
    )Direct consumer
    
    
    (19,294
    )
    
    
    (9,434
    )
    
    
    (9,860
    )
    
    
    (26,259
    )
    
    
    (16,677
    )
    
    
    (9,582
    )Indirect consumer
    
    
    (923
    )
    
    
    444
    
    
    
    (1,367
    )
    
    
    (814
    )
    
    
    (178
    )
    
    
    (636
    )Total portfolio loans
    
    
    (129,679
    )
    
    
    (75,309
    )
    
    
    (54,370
    )
    
    
    (93,467
    )
    
    
    (106,702
    )
    
    
    13,235Loans held for sale
    
    
    (47
    )
    
    
    349
    
    
    
    (396
    )
    
    
    (4,507
    )
    
    
    (3,814
    )
    
    
    (693
    )Total
    
    
    (132,232
    )
    
    
    (87,050
    )
    
    
    (45,182
    )
    
    
    (107,000
    )
    
    
    (109,075
    )
    
    
    2,075Interest Expense on Interest Bearing Liabilities:Deposits:Interest-bearing demand
    
    
    (850
    )
    
    
    (2,004
    )
    
    
    1,154
    
    
    
    (666
    )
    
    
    (271
    )
    
    
    (395
    )Savings
    
    
    (23,737
    )
    
    
    (24,723
    )
    
    
    986
    
    
    
    (19,896
    )
    
    
    (29,314
    )
    
    
    9,418Time
    
    
    (36,498
    )
    
    
    (29,758
    )
    
    
    (6,740
    )
    
    
    (15,749
    )
    
    
    (27,540
    )
    
    
    11,791Short-term borrowings
    
    
    (7,964
    )
    
    
    (4,099
    )
    
    
    (3,865
    )
    
    
    (26,509
    )
    
    
    (12,072
    )
    
    
    (14,437
    )Long-term debt
    
    
    (31,619
    )
    
    
    (1,744
    )
    
    
    (29,875
    )
    
    
    (10,933
    )
    
    
    (1,103
    )
    
    
    (9,830
    )Total
    
    
    (100,668
    )
    
    
    (62,328
    )
    
    
    (38,340
    )
    
    
    (73,753
    )
    
    
    (70,300
    )
    
    
    (3,453
    )Net Interest Income
    
    $
    (31,564
    )
    
    $
    (24,722
    )
    
    $
    (6,842
    )
    
    $
    (33,247
    )
    
    $
    (38,775
    )
    
    $
    5,528
 
 (1)
    
    Changes are based on actual interest income and do not reflect taxable
equivalent adjustments.(2)
    
    The change in interest not solely due to changes in volume or rates has been
allocated in proportion to the absolute dollar amounts of the change in each. 2009 compared with 2008
  43




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##### Table of Contents



2008 compared with 2007
  PROVISION FOR LOAN LOSSES
  NONINTEREST INCOME
  Noninterest Income2009-2008
    
    
    2008-2007(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    $ Change
    
    
    % ChangeService charges on deposit accounts
    
    $
    43,927
    
    
    $
    47,470
    
    
    $
    48,051
    
    
    $
    (3,543
    )
    
    
    (7.5
    )%
    
    $
    (581
    )
    
    
    (1.2
    )%Trust fees
    
    
    15,082
    
    
    
    17,967
    
    
    
    20,106
    
    
    
    (2,885
    )
    
    
    (16.1
    )
    
    
    (2,139
    )
    
    
    (10.6
    )Mortgage and other loan income
    
    
    12,609
    
    
    
    11,443
    
    
    
    16,021
    
    
    
    1,166
    
    
    
    10.2
    
    
    
    (4,578
    )
    
    
    (28.6
    )Brokerage and investment fees
    
    
    5,445
    
    
    
    7,109
    
    
    
    7,901
    
    
    
    (1,664
    )
    
    
    (23.4
    )
    
    
    (792
    )
    
    
    (10.0
    )ATM network user fees
    
    
    6,607
    
    
    
    6,319
    
    
    
    6,283
    
    
    
    288
    
    
    
    4.6
    
    
    
    36
    
    
    
    0.6Bankcard fees
    
    
    7,972
    
    
    
    7,440
    
    
    
    6,124
    
    
    
    532
    
    
    
    7.2
    
    
    
    1,316
    
    
    
    21.5Losses on loans held for sale
    
    
    (20,086
    )
    
    
    (9,373
    )
    
    
    (508
    )
    
    
    (10,713
    )
    
    
    114.3
    
    
    
    (8,865
    )
    
    
    N/MNet loss on debt extinguishment
    
    
    (15,929
    )
    
    
    
    
    
    
    
    
    
    
    (15,929
    )
    
    
    
    
    
    
    
    
    
    
    Other income
    
    
    11,794
    
    
    
    13,367
    
    
    
    18,590
    
    
    
    (1,573
    )
    
    
    (11.8
    )
    
    
    (5,223
    )
    
    
    (28.1
    )Total noninterest income
    
    $
    67,421
    
    
    $
    101,742
    
    
    $
    122,568
    
    
    $
    (34,321
    )
    
    
    (33.7
    )%
    
    $
    (20,826
    )
    
    
    (17.0
    )%
 
 N/M
    
      Not meaningful 2009 compared with 2008
  2008 compared with 2007
  44




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##### Table of Contents



NONINTEREST EXPENSE
  Noninterest Expense2009-2008
    
    
    2008-2007(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    $ Change
    
    
    % ChangeSalaries and employee benefits
    
    $
    139,193
    
    
    $
    158,193
    
    
    $
    175,895
    
    
    $
    (19,000
    )
    
    
    (12.0
    )%
    
    $
    (17,702
    )
    
    
    (10.1
    )%Occupancy
    
    
    27,820
    
    
    
    28,592
    
    
    
    30,971
    
    
    
    (772
    )
    
    
    (2.7
    )
    
    
    (2,379
    )
    
    
    (7.7
    )Professional services
    
    
    11,996
    
    
    
    15,184
    
    
    
    18,031
    
    
    
    (3,188
    )
    
    
    (21.0
    )
    
    
    (2,847
    )
    
    
    (15.8
    )Equipment
    
    
    11,989
    
    
    
    12,966
    
    
    
    14,650
    
    
    
    (977
    )
    
    
    (7.5
    )
    
    
    (1,684
    )
    
    
    (11.5
    )Data processing services
    
    
    18,017
    
    
    
    16,470
    
    
    
    16,234
    
    
    
    1,547
    
    
    
    9.4
    
    
    
    236
    
    
    
    1.5Advertising and public relations
    
    
    7,146
    
    
    
    5,897
    
    
    
    7,282
    
    
    
    1,249
    
    
    
    21.2
    
    
    
    (1,385
    )
    
    
    (19.0
    )Postage and delivery
    
    
    5,844
    
    
    
    7,342
    
    
    
    7,800
    
    
    
    (1,498
    )
    
    
    (20.4
    )
    
    
    (458
    )
    
    
    (5.9
    )Other loan expenses
    
    
    24,913
    
    
    
    13,381
    
    
    
    5,518
    
    
    
    11,532
    
    
    
    86.2
    
    
    
    7,863
    
    
    
    142.5Other real estate (ORE) expenses and losses
    
    
    27,852
    
    
    
    11,008
    
    
    
    325
    
    
    
    16,844
    
    
    
    153.0
    
    
    
    10,683
    
    
    
    N/MIntangible asset amortization
    
    
    7,036
    
    
    
    9,132
    
    
    
    11,534
    
    
    
    (2,096
    )
    
    
    (23.0
    )
    
    
    (2,402
    )
    
    
    (20.8
    )Goodwill impairment
    
    
    266,474
    
    
    
    178,089
    
    
    
    
    
    
    
    88,385
    
    
    
    49.6
    
    
    
    178,089
    
    
    
    100.0Restructuring and merger related expenses
    
    
    
    
    
    
    
    
    
    
    8,247
    
    
    
    
    
    
    
    
    
    
    
    (8,247
    )
    
    
    (100.0
    )Other expense
    
    
    54,741
    
    
    
    34,448
    
    
    
    30,936
    
    
    
    20,293
    
    
    
    58.9
    
    
    
    3,512
    
    
    
    11.4Total noninterest expense
    
    $
    603,021
    
    
    $
    490,702
    
    
    $
    327,423
    
    
    $
    112,319
    
    
    
    22.9
    %
    
    $
    163,279
    
    
    
    49.9
    %
 
 N/M
    
     Not meaningful 2009 compared with 2008
  2008 compared with 2007
  45




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##### Table of Contents



FDIC insurance premiums
    FEDERAL AND STATE INCOME TAXES
     46




---



##### Table of Contents



LINE OF BUSINESS RESULTS
  (in thousands)
    
    2009
    
    
    2008
    
    
    2007Regional Banking
    
    $
    (163,741
    )
    
    $
    21,658
    
    
    $
    85,444Specialty Consumer
    
    
    (66,589
    )
    
    
    (35,667
    )
    
    
    7,828Specialty Commercial
    
    
    (71,174
    )
    
    
    (174,115
    )
    
    
    23,074Wealth Management
    
    
    2,790
    
    
    
    547
    
    
    
    3,327Other
    
    
    (215,499
    )
    
    
    (205,475
    )
    
    
    (18,832
    )Net (loss) income
    
    $
    (514,213
    )
    
    $
    (393,052
    )
    
    $
    100,842
 2009 compared with 2008
     47




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##### Table of Contents



2008 compared with 2007
      48




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##### Table of Contents



FINANCIAL CONDITION
 TOTAL ASSETS
  MONEY MARKET INVESTMENTS AND INVESTMENT SECURITIES
  Investment Securities
 December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Securities available for sale, at fair valueFederal agencies
    
    $
    149,033
    
    
    $
    257,445
    
    
    $
    304,074Collaterized mortgage obligations
    
    
    442,989
    
    
    
    471,010
    
    
    
    586,954Mortgage-backed
    
    
    1,164,450
    
    
    
    973,961
    
    
    
    670,565State and municipal
    
    
    450,647
    
    
    
    538,761
    
    
    
    569,466Other
    
    
    17,946
    
    
    
    7,595
    
    
    
    1,105Total available for sale
    
    $
    2,225,065
    
    
    $
    2,248,772
    
    
    $
    2,132,164Securities held to maturity, at amortized costState and municipal
    
    $
    137,094
    
    
    $
    138,575
    
    
    $
    129,126Total investment securities
    
    $
    2,362,159
    
    
    $
    2,387,347
    
    
    $
    2,261,290
    49




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##### Table of Contents



Maturity Distribution of Investment Securities Portfolio (1)
 Due Within
    
    
    One to
    
    
    Five to
    
    
    AfterOne Year
    
    
    Five Years
    
    
    Ten Years
    
    
    Ten Years
    
    
    TotalDecember 31, 2009
    
    
    
    
    
    Avg.
    
    
    
    
    
    
    Avg.
    
    
    
    
    
    
    Avg.
    
    
    
    
    
    
    Avg.
    
    
    
    
    
    
    Avg.(in thousands)
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldSecurities available for sale, at fair value(2)Federal agencies(3)
    
    $
    97,591
    
    
    
    4.88
    %
    
    $
    36,309
    
    
    
    3.55
    %
    
    $
    15,133
    
    
    
    4.46
    %
    
    $
    
    
    
    
    
    %
    
    $
    149,033
    
    
    
    4.51
    %Collateralized
mortgage
obligations(3)
    
    
    35,368
    
    
    
    4.72
    
    
    
    272,240
    
    
    
    4.65
    
    
    
    135,351
    
    
    
    4.80
    
    
    
    30
    
    
    
    6.83
    
    
    
    442,989
    
    
    
    4.70Mortgage-backed(3)
    
    
    4,661
    
    
    
    6.59
    
    
    
    659,511
    
    
    
    4.80
    
    
    
    430,607
    
    
    
    4.46
    
    
    
    69,671
    
    
    
    4.63
    
    
    
    1,164,450
    
    
    
    4.67State and municipal(4)
    
    
    45,698
    
    
    
    5.14
    
    
    
    115,340
    
    
    
    4.28
    
    
    
    184,308
    
    
    
    4.13
    
    
    
    105,301
    
    
    
    3.99
    
    
    
    450,647
    
    
    
    4.24Other
    
    
    17,616
    
    
    
    1.02
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330
    
    
    
    10.47
    
    
    
    17,946
    
    
    
    1.20Total securities available for sale
    
    $
    200,934
    
    
    
    4.61
    %
    
    $
    1,083,400
    
    
    
    4.66
    %
    
    $
    765,399
    
    
    
    4.45
    %
    
    $
    175,332
    
    
    
    4.26
    %
    
    $
    2,225,065
    
    
    
    4.55
    %Securities held to maturity, at amortized costState and municipal(2)(4)Total securities held to maturity
    
    $
    
    
    
    
    0.00
    %
    
    $
    3,905
    
    
    
    0.92
    %
    
    $
    55,973
    
    
    
    3.51
    %
    
    $
    77,216
    
    
    
    4.05
    %
    
    $
    137,094
    
    
    
    3.74
    %
 
 (1)
    
    This table excludes stock holdings of the
Federal Home Loan Bank and Federal Reserve.(2)
    
    Yields are based on amortized cost.(3)
    
    Maturity distributions for collateralized mortgage obligations and
mortgage-backed securities are based on estimated average lives.(4)
    
    Average yields on tax-exempt obligations have been computed on a tax equivalent
basis, based on a 35% federal tax rate.  LOAN PORTFOLIO
   50




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##### Table of Contents



Portfolio Loans
    
    
    
    
    
    
    
    
    
    December 31,(in millions)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Commercial and industrial
    
    $
    1,976.1
    
    
    $
    2,602.3
    
    
    $
    2,557.1
    
    
    $
    2,004.9
    
    
    $
    1,688.1Commercial real estate (1)
    
    
    2,504.0
    
    
    
    2,565.9
    
    
    
    2,549.6
    
    
    
    2,442.5
    
    
    
    1,190.4Real estate construction (2)
    
    
    322.7
    
    
    
    398.9
    
    
    
    547.6
    
    
    
    678.1
    
    
    
    211.7Total commercial
    
    
    4,802.8
    
    
    
    5,567.1
    
    
    
    5,654.3
    
    
    
    5,125.5
    
    
    
    3,090.2Residential mortgage
    
    
    1,036.5
    
    
    
    1,262.8
    
    
    
    1,445.2
    
    
    
    1,543.5
    
    
    
    539.8Direct consumer
    
    
    1,261.4
    
    
    
    1,452.2
    
    
    
    1,572.3
    
    
    
    1,721.4
    
    
    
    1,142.0Indirect consumer
    
    
    805.2
    
    
    
    820.5
    
    
    
    829.4
    
    
    
    840.6
    
    
    
    844.1Total
    
    $
    7,905.9
    
    
    $
    9,102.6
    
    
    $
    9,501.2
    
    
    $
    9,231.0
    
    
    $
    5,616.1
 Commercial Loan Maturities and Interest Rate Sensitivity at December 31, 2009
 Within
    
    
    One to
    
    
    AfterOne Year
    
    
    Five Years
    
    
    Five Years
    
    
    TotalCommercial and industrial
    
    $
    575.7
    
    
    $
    1,216.6
    
    
    $
    183.8
    
    
    $
    1,976.1Commercial real estate
    
    
    830.0
    
    
    
    1,452.5
    
    
    
    221.5
    
    
    
    2,504.0Real estate construction
    
    
    164.0
    
    
    
    156.9
    
    
    
    1.8
    
    
    
    322.7Total commercial
    
    $
    1,569.7
    
    
    $
    2,826.0
    
    
    $
    407.1
    
    
    $
    4,802.8Loans above:With floating interest rates
    
    $
    1,067.6
    
    
    $
    1,762.7
    
    
    $
    327.6
    
    
    $
    3,157.9With predetermined interest rates
    
    
    502.1
    
    
    
    1,004.8
    
    
    
    138.0
    
    
    
    1,644.9Total
    
    $
    1,569.7
    
    
    $
    2,767.5
    
    
    $
    465.6
    
    
    $
    4,802.8
 
 (1)
    
    Commercial real estate consists of income producing and owner occupied loan
types(2)
    
    Real estate construction consists of land hold, land development, and commercial
real estate construction loan types   Commercial and Industrial.
  51




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Commercial Real Estate.
   Real Estate Construction.
  Residential Mortgage Loans .
 52




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##### Table of Contents



Residential Mortgage Loan Balances By Category
 December 31,(in thousands)
    
    2009
    
    
    2008| |Fixed rate mortgages
    
    $
    339,019
    
    
    $
    423,698Adjustable rate mortgages
    
    
    679,577
    
    
    
    795,482Construction mortgages
    
    
    17,847
    
    
    
    43,661Total residential mortgages
    
    $
    1,036,443
    
    
    $
    1,262,841
  Residential Mortgage Loan Origination Volume
 (In thousands)
    
    2009
    
    
    2008Fixed rate mortgages
    
    $
    298,743
    
    
    $
    273,901Adjustable rate mortgages
    
    
    2,399
    
    
    
    48,593Construction mortgages
    
    
    3,878
    
    
    
    20,325Total
    
    $
    305,020
    
    
    $
    342,819
  Direct Consumer.
 53




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##### Table of Contents



Indirect Consumer.
 LOANS HELD FOR SALE
  CREDIT RISK MANAGEMENT
  54




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##### Table of Contents



December 31,Commercial Watchlist
    
    2009
    
    
    2008
    
    
    2007Accruing loans only
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in millions)
    
    $
    
    
    Portfolio
    
    
    $
    
    
    Portfolio
    
    
    $
    
    
    PortfolioLand Hold
    
    $
    24.8
    
    
    
    68.99
    %
    
    $
    18.5
    
    
    
    41.11
    %
    
    $
    25.1
    
    
    
    40.81
    %Land Development
    
    
    88.0
    
    
    
    80.78
    
    
    
    49.3
    
    
    
    37.15
    
    
    
    66.3
    
    
    
    41.72Construction
    
    
    63.5
    
    
    
    35.68
    
    
    
    74.8
    
    
    
    28.39
    
    
    
    81.6
    
    
    
    25.59Income Producing
    
    
    521.9
    
    
    
    34.37
    
    
    
    401.0
    
    
    
    25.77
    
    
    
    211.2
    
    
    
    14.12Owner-Occupied
    
    
    247.3
    
    
    
    25.09
    
    
    
    178.4
    
    
    
    18.44
    
    
    
    184.1
    
    
    
    17.34Total Commercial Real Estate
    
    
    945.5
    
    
    
    33.45
    
    
    
    722.0
    
    
    
    24.35
    
    
    
    568.3
    
    
    
    18.35Commercial and Industrial
    
    
    475.3
    
    
    
    24.05
    
    
    
    436.8
    
    
    
    16.78
    
    
    
    387.4
    
    
    
    15.15Total Watchlist Loans
    
    $
    1,420.8
    
    
    
    29.58
    %
    
    $
    1,158.8
    
    
    
    20.82
    %
    
    $
    955.7
    
    
    
    16.90
    %
 55




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##### Table of Contents



December 31,Delinquency Rates By Loan Portfolio
    
    2009
    
    
    2008
    
    
    200730 to 89 days Past Due
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in millions)
    
    $
    
    
    Portfolio
    
    
    $
    
    
    Portfolio
    
    
    $
    
    
    PortfolioLand Hold
    
    $
    0.6
    
    
    
    1.56
    %
    
    $
    3.9
    
    
    
    8.67
    %
    
    $
    4.6
    
    
    
    7.48
    %Land Development
    
    
    4.7
    
    
    
    4.34
    
    
    
    5.2
    
    
    
    3.92
    
    
    
    28.7
    
    
    
    18.06Construction
    
    
    1.7
    
    
    
    0.95
    
    
    
    27.3
    
    
    
    10.36
    
    
    
    31.7
    
    
    
    9.94Income Producing
    
    
    40.8
    
    
    
    2.69
    
    
    
    76.7
    
    
    
    4.93
    
    
    
    54.0
    
    
    
    3.61Owner-Occupied
    
    
    25.0
    
    
    
    2.53
    
    
    
    37.5
    
    
    
    3.88
    
    
    
    20.3
    
    
    
    1.91Total Commercial Real Estate
    
    
    72.8
    
    
    
    2.57
    
    
    
    150.6
    
    
    
    5.08
    
    
    
    139.3
    
    
    
    4.50Commercial and Industrial
    
    
    17.0
    
    
    
    0.86
    
    
    
    56.5
    
    
    
    2.17
    
    
    
    39.0
    
    
    
    1.53Total Commercial Loans
    
    
    89.8
    
    
    
    1.87
    
    
    
    207.1
    
    
    
    3.72
    
    
    
    178.3
    
    
    
    3.15Residential Mortgage
    
    
    22.2
    
    
    
    2.15
    
    
    
    39.5
    
    
    
    3.13
    
    
    
    46.4
    
    
    
    3.21Direct Consumer
    
    
    27.0
    
    
    
    2.14
    
    
    
    25.5
    
    
    
    1.76
    
    
    
    24.3
    
    
    
    1.55Indirect Consumer
    
    
    16.3
    
    
    
    2.02
    
    
    
    18.5
    
    
    
    2.25
    
    
    
    15.9
    
    
    
    1.92Total Consumer Loans
    
    
    65.5
    
    
    
    2.11
    
    
    
    83.5
    
    
    
    2.36
    
    
    
    86.6
    
    
    
    2.25Total Delinquent Loans
    
    $
    155.3
    
    
    
    1.96
    %
    
    $
    290.6
    
    
    
    3.19
    %
    
    $
    264.9
    
    
    
    2.79
    %
  NONPERFORMING ASSETS
  56




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##### Table of Contents



Nonperforming Assets and Past Due Loans
    
    
    
    
    
    
    
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Nonperforming Portfolio Loans(1)NonaccrualLess than 30 days past due
    
    $
    89,241
    
    
    $
    35,168
    
    
    $
    8,133
    
    
    $
    4,305
    
    
    $
    4,206From 30 to 89 days past due
    
    
    63,464
    
    
    
    25,257
    
    
    
    11,617
    
    
    
    1,413
    
    
    
    1,13690 or more days past due
    
    
    317,048
    
    
    
    243,868
    
    
    
    165,647
    
    
    
    52,174
    
    
    
    26,798Total
    
    
    469,753
    
    
    
    304,293
    
    
    
    185,397
    
    
    
    57,892
    
    
    
    32,140Loans 90 days or more past due and still accruing
    
    
    3,039
    
    
    
    1,486
    
    
    
    3,650
    
    
    
    767
    
    
    
    238Restructured loans and still accruing
    
    
    2,629
    
    
    
    256
    
    
    
    315
    
    
    
    378
    
    
    
    Total nonperforming portfolio loans
    
    
    475,421
    
    
    
    306,035
    
    
    
    189,362
    
    
    
    59,037
    
    
    
    32,378Nonperforming loans held for sale
    
    
    65,247
    
    
    
    75,142
    
    
    
    21,676
    
    
    
    22,846
    
    
    
    Other repossessed assets acquired
    
    
    54,394
    
    
    
    58,037
    
    
    
    40,502
    
    
    
    20,165
    
    
    
    7,351Total nonperforming assets(2)
    
    $
    595,062
    
    
    $
    439,214
    
    
    $
    251,540
    
    
    $
    102,048
    
    
    $
    39,729Nonperforming loans as a percent of
portfolio loans
    
    
    6.01
    %
    
    
    3.36
    %
    
    
    1.99
    %
    
    
    0.64
    %
    
    
    0.58
    %Nonperforming assets as a percent of portfolio loans
plus other repossessed assets acquired
    
    
    7.48
    
    
    
    4.79
    
    
    
    2.64
    
    
    
    1.10
    
    
    
    0.71Nonperforming assets as a percent of total assets
    
    
    4.99
    
    
    
    3.36
    
    
    
    1.86
    
    
    
    0.73
    
    
    
    0.51Nonperforming Portfolio Loans by Type(1)(3)Commercial and industrial
    
    $
    86,337
    
    
    $
    66,285
    
    
    $
    16,581
    
    
    $
    8,843
    
    
    $
    12,118Commercial real estate
    
    
    236,753
    
    
    
    162,544
    
    
    
    110,159
    
    
    
    14,915
    
    
    
    5,068Total commercial
    
    
    323,090
    
    
    
    228,829
    
    
    
    126,740
    
    
    
    23,758
    
    
    
    17,186Residential mortgage
    
    
    127,100
    
    
    
    59,515
    
    
    
    46,865
    
    
    
    28,428
    
    
    
    8,412Direct Consumer
    
    
    22,601
    
    
    
    15,076
    
    
    
    13,700
    
    
    
    6,041
    
    
    
    4,326Indirect Consumer
    
    
    2,630
    
    
    
    2,615
    
    
    
    2,057
    
    
    
    810
    
    
    
    2,454Total nonperforming portfolio loans
    
    $
    475,421
    
    
    $
    306,035
    
    
    $
    189,362
    
    
    $
    59,037
    
    
    $
    32,378
 
 (1)
    
    Refer to Note 4 for a summary of interest income foregone on nonaccrual and restructured loans, as of December 31, 2009, 2008 and 2007.(2)
    
    December 31, 2006 amounts include the following nonperforming asset balances acquired in the Republic merger:
Less than 30 days past due and nonaccrual $0.6 million, from 30 to 89 days past due and nonaccrual $0.9 million, 90 days or more past due and nonaccrual $29.2 million, no 90 days or more past due and still accruing
and no restructured loans, nonperforming held for sale $21.6 million, and other repossessed assets acquired $12.6 million.(3)
    
    December 31, 2006 amounts include the following nonperforming loan balances acquired in the Republic merger: Commercial
$0.2 million, commercial real estate $8.4 million, residential mortgage $19.4 million, direct consumer $2.6 million, indirect consumer $0.1 million.   57




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##### Table of Contents



ALLOWANCE FOR LOAN LOSSES
  Summary of Loan Loss Experience(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Allowance for loan losses at January 1
    
    $
    255,321
    
    
    $
    163,353
    
    
    $
    169,104
    
    
    $
    116,400
    
    
    $
    122,184Provision for loan losses
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177
    
    
    
    11,265
    
    
    
    1,109Charge-offs:Commercial and industrial
    
    
    63,849
    
    
    
    27,001
    
    
    
    6,123
    
    
    
    4,468
    
    
    
    9,165Commercial real estate
    
    
    123,858
    
    
    
    112,478
    
    
    
    27,194
    
    
    
    2,826
    
    
    
    3,755Residential mortgage
    
    
    18,965
    
    
    
    24,569
    
    
    
    5,141
    
    
    
    1,640
    
    
    
    1,152Direct consumer
    
    
    24,901
    
    
    
    16,995
    
    
    
    11,007
    
    
    
    5,823
    
    
    
    5,290Indirect consumer
    
    
    21,234
    
    
    
    16,889
    
    
    
    10,126
    
    
    
    9,062
    
    
    
    9,485Total charge-offs
    
    
    252,807
    
    
    
    197,932
    
    
    
    59,591
    
    
    
    23,819
    
    
    
    28,847Recoveries:Commercial and industrial
    
    
    6,392
    
    
    
    3,153
    
    
    
    3,144
    
    
    
    3,022
    
    
    
    16,526Commercial real estate
    
    
    3,590
    
    
    
    716
    
    
    
    1,303
    
    
    
    648
    
    
    
    1,195Residential mortgage
    
    
    34
    
    
    
    29
    
    
    
    184
    
    
    
    154
    
    
    
    69Direct consumer
    
    
    1,557
    
    
    
    1,726
    
    
    
    1,723
    
    
    
    1,389
    
    
    
    1,419Indirect consumer
    
    
    2,328
    
    
    
    2,222
    
    
    
    2,309
    
    
    
    2,342
    
    
    
    2,745Total recoveries
    
    
    13,901
    
    
    
    7,846
    
    
    
    8,663
    
    
    
    7,555
    
    
    
    21,954Net charge-offs
    
    
    238,906
    
    
    
    190,086
    
    
    
    50,928
    
    
    
    16,264
    
    
    
    6,893Allowance of acquired bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,703
    
    
    
    Allowance for loan losses at December 31
    
    $
    342,370
    
    
    $
    255,321
    
    
    $
    163,353
    
    
    $
    169,104
    
    
    $
    116,400Allowance for losses on lending-related
commitments at December 31
    
    $
    3,166
    
    
    $
    3,941
    
    
    $
    5,571
    
    
    $
    6,119
    
    
    $
    3,023Portfolio loans at year-end
    
    $
    7,905,859
    
    
    $
    9,102,598
    
    
    $
    9,501,244
    
    
    $
    9,231,082
    
    
    $
    5,616,119Average portfolio loans
    
    
    8,473,946
    
    
    
    9,433,952
    
    
    
    9,212,066
    
    
    
    5,657,476
    
    
    
    5,493,280Allowance for loan losses as a percent of
nonperforming loans
    
    
    72.01
    %
    
    
    83.43
    %
    
    
    86.27
    %
    
    
    286.44
    %
    
    
    359.50
    %Allowance for loan losses as a percent of
loans outstanding at year-end
    
    
    4.33
    
    
    
    2.80
    
    
    
    1.72
    
    
    
    1.83
    
    
    
    2.07Net loans charged off as a percent
of average loans
    
    
    2.82
    
    
    
    2.01
    
    
    
    0.55
    
    
    
    0.29
    
    
    
    0.13
   58




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##### Table of Contents



Allocation of the Allowance for Loan Losses (1)
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofDecember 31,
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total(in millions)
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    LoansSpecific allocated allowance:Commercial (2)
    
    $
    45.9
    
    
    
    
    
    
    $
    39.9
    
    
    
    
    
    
    $
    17.8
    
    
    
    
    
    
    $
    7.6
    
    
    
    
    
    
    $
    5.1Residential mortgage
    
    
    6.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Risk allocated allowances:Commercial (2)
    
    
    158.5
    
    
    
    60.8
    %
    
    
    112.0
    
    
    
    61.2
    %
    
    
    85.4
    
    
    
    59.5
    %
    
    
    94.8
    
    
    
    55.5
    %
    
    
    55.2
    
    
    
    55.1
    %Residential mortgage
    
    
    51.2
    
    
    
    13.1
    
    
    
    25.4
    
    
    
    13.9
    
    
    
    14.2
    
    
    
    15.2
    
    
    
    15.1
    
    
    
    16.7
    
    
    
    6.3
    
    
    
    9.6Direct Consumer
    
    
    34.0
    
    
    
    15.9
    
    
    
    29.2
    
    
    
    15.9
    
    
    
    16.3
    
    
    
    16.6
    
    
    
    16.7
    
    
    
    18.7
    
    
    
    12.4
    
    
    
    20.3Indirect Consumer
    
    
    39.5
    
    
    
    10.2
    
    
    
    35.9
    
    
    
    9.0
    
    
    
    23.6
    
    
    
    8.7
    
    
    
    25.5
    
    
    
    9.1
    
    
    
    27.5
    
    
    
    15.0Total risk
allocated allowance
    
    
    283.2
    
    
    
    
    
    
    
    202.5
    
    
    
    
    
    
    
    139.5
    
    
    
    
    
    
    
    152.1
    
    
    
    
    
    
    
    101.4Total allocated
    
    
    336.0
    
    
    
    100.0
    %
    
    
    242.4
    
    
    
    100.0
    %
    
    
    157.3
    
    
    
    100.0
    %
    
    
    159.7
    
    
    
    100.0
    %
    
    
    106.5
    
    
    
    100.0
    %General valuation allowances
    
    
    6.4
    
    
    
    
    
    
    
    12.9
    
    
    
    
    
    
    
    6.1
    
    
    
    
    
    
    
    9.4
    
    
    
    
    
    
    
    9.9Total
    
    $
    342.4
    
    
    
    
    
    
    $
    255.3
    
    
    
    
    
    
    $
    163.4
    
    
    
    
    
    
    $
    169.1
    
    
    
    
    
    
    $
    116.4
 
 (1)
    
    The allocation of the allowance for loan losses in the above table is based upon ranges of estimates and is not intended to imply either limitations on the usage of the allowance or
precision of the specific amounts. Citizens and its subsidiaries do not view the allowance for loan losses as being divisible among the various categories of loans.
The entire allowance is available to absorb any future losses without regard to the category or categories in which the charged-off loans are classified.(2)
    
    The commercial category includes both commercial and commercial real estate loans. Specific Allocated Allowance.
 Risk Allocated Allowance.
 59




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General Valuation Allowances.
 GOODWILL
  DEPOSITS
   Average Deposits
    
    2009
    
    
    2008
    
    
    2007Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average(in thousands)
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateNoninterest-bearing deposits
    
    $
    1,226,079
    
    
    
    
    %
    
    $
    1,122,974
    
    
    
    
    %
    
    $
    1,139,695
    
    
    
    
    %Interest-bearing demand deposits
    
    
    979,590
    
    
    
    0.43
    
    
    
    771,735
    
    
    
    0.66
    
    
    
    831,983
    
    
    
    0.69Savings deposits
    
    
    2,610,246
    
    
    
    0.78
    
    
    
    2,551,570
    
    
    
    1.73
    
    
    
    2,188,296
    
    
    
    2.92Time deposits
    
    
    4,097,896
    
    
    
    3.30
    
    
    
    4,268,931
    
    
    
    4.02
    
    
    
    4,008,919
    
    
    
    4.68Total deposits
    
    $
    8,913,811
    
    
    
    1.79
    %
    
    $
    8,715,210
    
    
    
    2.53
    %
    
    $
    8,168,893
    
    
    
    3.15
    %
   60




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##### Table of Contents



Maturity of Time Certificates of Deposit of $100,000 or more at December 31, 2009
 (in thousands)Three months or less
    
    $
    293,700After three but within six months
    
    
    188,828After six but within twelve months
    
    
    225,518After twelve months
    
    
    1,130,142Total
    
    $
    1,838,188
  BORROWED FUNDS
   CAPITAL RESOURCES
  Regulatory MinimumAdequately
    
    
    Well-
    
    
    
    
    
    
    December 31,Capitalized
    
    
    Capitalized
    
    
    2009
    
    
    2008
    
    
    2007Risk based:Tier 1 capital
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    12.52
    %
    
    
    12.21
    %
    
    
    9.18
    %Total capital
    
    
    8.00
    
    
    
    10.00
    
    
    
    13.93
    
    
    
    14.49
    
    
    
    11.66Tier 1 Leverage
    
    
    4.00
    
    
    
    5.00
    
    
    
    9.21
    
    
    
    9.66
    
    
    
    7.53
  61




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##### Table of Contents



CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
 Contractual Obligations
  Contractual Obligations
 Minimum Payments Due by PeriodDecember 31, 2009
    
    
    
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More than(in thousands)
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsDeposits without stated maturities(1)(2)
    
    $
    5,018,203
    
    
    $
    5,018,203
    
    
    $
    
    
    
    $
    
    
    
    $
    Deposits with stated maturities(1)(2)
    
    
    3,890,363
    
    
    
    1,941,417
    
    
    
    1,254,705
    
    
    
    688,920
    
    
    
    5,321Fed funds purchased and securities sold under
agreements to repurchase(1)
    
    
    43,780
    
    
    
    43,780
    
    
    
    
    
    
    
    
    
    
    
    Other short-term borrowings(1)
    
    
    7,283
    
    
    
    7,283
    
    
    
    
    
    
    
    
    
    
    
    FHLB borrowings(1)( 2)
    
    
    1,305,627
    
    
    
    475,210
    
    
    
    487,822
    
    
    
    500
    
    
    
    342,095Other borrowed debt(1)(2)
    
    
    104,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,154Subordinated debt(1)(2)
    
    
    91,717
    
    
    
    
    
    
    
    
    
    
    
    17,266
    
    
    
    74,451Purchase obligations
    
    
    143,277
    
    
    
    46,355
    
    
    
    81,944
    
    
    
    12,565
    
    
    
    2,413Operating leases and non-cancelable contracts
    
    
    26,914
    
    
    
    5,868
    
    
    
    8,882
    
    
    
    5,291
    
    
    
    6,873Total
    
    $
    10,631,318
    
    
    $
    7,538,116
    
    
    $
    1,833,353
    
    
    $
    724,542
    
    
    $
    535,307
 
 (1)
    
    In the banking industry, interest-bearing obligations are principally utilized to fund
interest-bearing assets. As such, interest charges on related contractual obligations were
excluded from reported amounts as the potential cash outflows would have corresponding cash
inflows from interest-bearing assets.(2)
    
    This schedule excludes all carrying value adjustments, such as purchase
accounting fair value adjustments, hedge accounting fair value adjustments, and
unamortized premiums and discounts, that will not affect future cash payments associated
with the maturity of this debt.   62




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Off-Balance Sheet Arrangements
   Off Balance Sheet Financial Instruments
 Expected Expiration Dates by PeriodDecember 31,
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More than
    
    
    December 31,(in thousands)
    
    2009
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 years
    
    
    2008Financial
instruments whose contract amounts represent credit risk:Loan commitments to extend credit
    
    $
    1,371,626
    
    
    $
    874,080
    
    
    $
    173,450
    
    
    $
    126,918
    
    
    $
    197,178
    
    
    $
    2,048,258Standby letters of credit
    
    
    236,006
    
    
    
    111,524
    
    
    
    79,698
    
    
    
    9,940
    
    
    
    34,844
    
    
    
    247,367Commercial letters of credit
    
    
    23
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financial instruments subject to interest rate risk:Receive fixed and pay fixed swaps
    
    
    845,000
    
    
    
    135,000
    
    
    
    710,000
    
    
    
    
    
    
    
    
    
    
    
    1,005,000Customer initiated swaps and corresponding offsets
    
    
    1,040,336
    
    
    
    115,292
    
    
    
    418,195
    
    
    
    307,913
    
    
    
    198,936
    
    
    
    1,120,348Total
    
    $
    3,492,991
    
    
    $
    1,235,919
    
    
    $
    1,381,343
    
    
    $
    444,771
    
    
    $
    430,958
    
    
    $
    4,420,973
      63




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##### Table of Contents



LIQUIDITY RISK MANAGEMENT
    64




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##### Table of Contents



Credit Ratings
 Moodys
    
    
    
    
    
    
    DominionStandard &
    
    
    Investor
    
    
    Fitch
    
    
    Bond RatingPoors
    
    
    Service
    
    
    Ratings
    
    
    ServiceCitizens
Republic Bancorp (Holding Company)Long-Term Debt
    
    
    B-
    
    
    
    B2
    
    
    
    B-
    
    
    
    B (high)Short-Term Debt
    
    
    C
    
    
    
    Not Prime
    
    
    
    B
    
    
    
    R-4Trust Preferred
    
    
    C
    
    
    
    Caa2
    
    
    
    C
    
    
    
    BCitizens BankCertificate of Deposit
    
    
    
    
    
    
    Ba3
    
    
    
    B
    
    
    
    BBF&M Bank-IowaCertificate of Deposit
    
    
    
    
    
    
    
    
    
    
    B
    
    
    
    BB
       65




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INTEREST RATE RISK
      66




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  67




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Consolidated Balance Sheets  Citizens Republic Bancorp and Subsidiaries
 December 31,(in thousands, except share amounts)
    
    2009
    
    
    2008AssetsCash and due from banks
    
    $
    163,137
    
    
    $
    171,695Money market investments
    
    
    706,163
    
    
    
    214,925Investment Securities:Securities available for sale, at fair value
    
    
    2,225,065
    
    
    
    2,248,772Securities held to maturity, at amortized cost
(fair value of $139,665 and $137,846, respectively)
    
    
    137,094
    
    
    
    138,575Total investment securities
    
    
    2,362,159
    
    
    
    2,387,347FHLB and Federal Reserve stock
    
    
    156,278
    
    
    
    148,764Portfolio loans:Commercial and industrial
    
    
    1,976,105
    
    
    
    2,602,334Commercial real estate
    
    
    2,826,741
    
    
    
    2,964,721Total commercial
    
    
    4,802,846
    
    
    
    5,567,055Residential mortgage
    
    
    1,036,443
    
    
    
    1,262,841Direct consumer
    
    
    1,261,389
    
    
    
    1,452,166Indirect consumer
    
    
    805,181
    
    
    
    820,536Total portfolio loans
    
    
    7,905,859
    
    
    
    9,102,598Less: Allowance for loan losses
    
    
    (342,370
    )
    
    
    (255,321
    )Net portfolio loans
    
    
    7,563,489
    
    
    
    8,847,277Loans held for sale
    
    
    80,459
    
    
    
    91,362Premises and equipment
    
    
    117,095
    
    
    
    124,217Goodwill
    
    
    330,744
    
    
    
    597,218Other intangible assets
    
    
    14,378
    
    
    
    21,414Bank owned life insurance
    
    
    220,190
    
    
    
    218,333Other assets
    
    
    217,539
    
    
    
    263,464Total assets
    
    $
    11,931,631
    
    
    $
    13,086,016LiabilitiesNoninterest-bearing deposits
    
    $
    1,330,707
    
    
    $
    1,143,294Interest-bearing demand deposits
    
    
    1,114,863
    
    
    
    780,176Savings deposits
    
    
    2,561,819
    
    
    
    2,504,320Time deposits
    
    
    3,901,951
    
    
    
    4,624,616Total deposits
    
    
    8,909,340
    
    
    
    9,052,406Federal funds purchased and securities sold
under agreements to repurchase
    
    
    43,780
    
    
    
    64,072Other short-term borrowings
    
    
    7,283
    
    
    
    10,377Other liabilities
    
    
    126,705
    
    
    
    164,274Long-term debt
    
    
    1,513,487
    
    
    
    2,193,566Total liabilities
    
    
    10,600,595
    
    
    
    11,484,695Shareholders EquityPreferred stock  no par value:Authorized - 5,000,000 shares; Issued and outstanding -
300,000 at 12/31/09
and 12/31/08, redemption value of $300 million
    
    
    271,990
    
    
    
    266,088Common stock  no par valueAuthorized - 1,050,000,000 shares at 12/31/09,
150,000,000 shares at 12/31/08;Issued and outstanding - 394,397,406 at 12/31/09;
125,996,938 at 12/31/08
    
    
    1,429,771
    
    
    
    1,214,469Retained (deficit) earnings
    
    
    (363,632
    )
    
    
    170,358Accumulated other comprehensive loss
    
    
    (7,093
    )
    
    
    (49,594
    )Total shareholders equity
    
    
    1,331,036
    
    
    
    1,601,321Total liabilities and shareholders equity
    
    $
    11,931,631
    
    
    $
    13,086,016
  68




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##### Table of Contents



Consolidated Statements of Operations
Citizens Republic Bancorp and Subsidiaries
 (in thousands, except per share amounts)
    
    2009
    
    
    2008
    
    
    2007Interest IncomeInterest and fees on loans
    
    $
    456,347
    
    
    $
    586,073
    
    
    $
    684,047Interest and dividends on investment securities:Taxable
    
    
    80,437
    
    
    
    78,089
    
    
    
    88,078Tax-exempt
    
    
    26,340
    
    
    
    29,096
    
    
    
    29,268Dividends on FHLB and Federal Reserve stock
    
    
    4,255
    
    
    
    7,269
    
    
    
    6,414Money market investments
    
    
    1,300
    
    
    
    384
    
    
    
    104Total interest income
    
    
    568,679
    
    
    
    700,911
    
    
    
    807,911Interest ExpenseDeposits
    
    
    159,798
    
    
    
    220,883
    
    
    
    257,194Short-term borrowings
    
    
    227
    
    
    
    8,191
    
    
    
    34,700Long-term debt
    
    
    91,286
    
    
    
    122,905
    
    
    
    133,838Total interest expense
    
    
    251,311
    
    
    
    351,979
    
    
    
    425,732Net Interest Income
    
    
    317,368
    
    
    
    348,932
    
    
    
    382,179Provision for loan losses
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177Net interest (loss) income after provision for loan losses
    
    
    (8,587
    )
    
    
    66,878
    
    
    
    337,002Noninterest IncomeService charges on deposit accounts
    
    
    43,927
    
    
    
    47,470
    
    
    
    48,051Trust fees
    
    
    15,082
    
    
    
    17,967
    
    
    
    20,106Mortgage and other loan income
    
    
    12,609
    
    
    
    11,443
    
    
    
    16,021Brokerage and investment fees
    
    
    5,445
    
    
    
    7,109
    
    
    
    7,901ATM network user fees
    
    
    6,607
    
    
    
    6,319
    
    
    
    6,283Bankcard fees
    
    
    7,972
    
    
    
    7,440
    
    
    
    6,124Losses on loans held for sale
    
    
    (20,086
    )
    
    
    (9,373
    )
    
    
    (508
    )Net loss on debt extinguishment
    
    
    (15,929
    )
    
    
    
    
    
    
    Other income
    
    
    11,794
    
    
    
    13,367
    
    
    
    18,590Total noninterest income
    
    
    67,421
    
    
    
    101,742
    
    
    
    122,568Noninterest ExpenseSalaries and employee benefits
    
    
    139,193
    
    
    
    158,193
    
    
    
    175,895Occupancy
    
    
    27,820
    
    
    
    28,592
    
    
    
    30,971Professional services
    
    
    11,996
    
    
    
    15,184
    
    
    
    18,031Equipment
    
    
    11,989
    
    
    
    12,966
    
    
    
    14,650Data processing services
    
    
    18,017
    
    
    
    16,470
    
    
    
    16,234Advertising and public relations
    
    
    7,146
    
    
    
    5,897
    
    
    
    7,282Postage and delivery
    
    
    5,844
    
    
    
    7,342
    
    
    
    7,800Other loan expenses
    
    
    24,913
    
    
    
    13,381
    
    
    
    5,518Other real estate (ORE) expenses and losses
    
    
    27,852
    
    
    
    11,008
    
    
    
    325Intangible asset amortization
    
    
    7,036
    
    
    
    9,132
    
    
    
    11,534Goodwill impairment
    
    
    266,474
    
    
    
    178,089
    
    
    
    Restructuring and merger related expenses
    
    
    
    
    
    
    
    
    
    
    8,247Other expense
    
    
    54,741
    
    
    
    34,448
    
    
    
    30,936Total noninterest expense
    
    
    603,021
    
    
    
    490,702
    
    
    
    327,423(Loss) Income Before Income Taxes
    
    
    (544,187
    )
    
    
    (322,082
    )
    
    
    132,147Income tax (benefit) provision
    
    
    (29,974
    )
    
    
    70,970
    
    
    
    31,305Net (Loss) Income
    
    
    (514,213
    )
    
    
    (393,052
    )
    
    
    100,842Deemed dividend on convertible preferred stock
    
    
    
    
    
    
    (11,737
    )
    
    
    Dividend on redeemable preferred stock
    
    
    (19,777
    )
    
    
    (227
    )
    
    
    Net (Loss) Income Attributable to Common Shareholders
    
    $
    (533,990
    )
    
    $
    (405,016
    )
    
    $
    100,842Net (Loss) Income Per Common Share:Basic
    
    $
    (2.75
    )
    
    $
    (4.30
    )
    
    $
    1.33Diluted
    
    
    (2.75
    )
    
    
    (4.30
    )
    
    
    1.33Average Common Shares Outstanding:Basic
    
    
    193,832,747
    
    
    
    94,155,551
    
    
    
    75,339,430Diluted
    
    
    193,853,037
    
    
    
    94,169,844
    
    
    
    75,522,807
  69




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##### Table of Contents



Consolidated Statements of Changes in Shareholders Equity  Citizens Republic Bancorp and Subsidiaries
 AccumulatedPreferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherStock
    
    
    Common Stock
    
    
    Retained
    
    
    Comprehensive(in thousands, except per share amounts)
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at January 1, 2007
    
    
    
    
    
    
    75,676
    
    
    $
    980,772
    
    
    $
    584,289
    
    
    $
    (7,375
    )
    
    $
    1,557,686Comprehensive income, net of tax:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,842
    
    
    
    
    
    
    
    100,842Other comprehensive income:Net unrealized gain on securities available-for-sale,
net of tax effect of $5,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,991Less: Reclassification adjustment for net losses included
in net income, net of tax effect of $9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16Net change in unrealized loss on qualifying cash flow
hedges, net of tax effect of ($451)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (838
    )Net change in unrecognized pension and post retirement costs,
net of tax effect of $1,781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,307Other comprehensive income total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,476Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,318Proceeds from stock options exercised and restricted stock activity
    
    
    
    
    
    
    709
    
    
    
    4,833
    
    
    
    
    
    
    
    
    
    
    
    4,833Recognition of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    3,355
    
    
    
    
    
    
    
    
    
    
    
    3,355Cash dividends declared on common shares  $1.160 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,798
    )
    
    
    
    
    
    
    (87,798
    )Shares acquired for retirement and purchased for taxes
    
    
    
    
    
    
    (663
    )
    
    
    (13,514
    )
    
    
    
    
    
    
    
    
    
    
    (13,514
    )Balance at December 31, 2007
    
    $
    
    
    
    
    75,722
    
    
    $
    975,446
    
    
    $
    597,333
    
    
    $
    5,101
    
    
    $
    1,577,880Comprehensive loss, net of tax:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (393,052
    )
    
    
    
    
    
    
    (393,052
    )Other comprehensive (loss) income:Net unrealized loss on securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,725
    )Net change in unrealized gain on qualifying cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,578Net change in unrecognized pension and post retirement costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,548
    )Other comprehensive income total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54,695
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (447,747
    )Issuance of preferred stock (2,408 shares), net of costs of $6,221
    
    
    114,161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,161Deemed dividend on preferred stock
    
    
    11,737
    
    
    
    
    
    
    
    
    
    
    
    (11,737
    )
    
    
    
    
    
    
    Conversion of preferred stock to common stock
    
    
    (125,898
    )
    
    
    30,096
    
    
    
    125,898
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock, net of costs of $4,774
    
    
    
    
    
    
    19,904
    
    
    
    74,844
    
    
    
    
    
    
    
    
    
    
    
    74,844Issuance of redeemable preferred stock and warrant (300,000 shares)
    
    
    265,861
    
    
    
    
    
    
    
    34,139
    
    
    
    
    
    
    
    
    
    
    
    300,000Dividend on redeemable  preferred stock
    
    
    227
    
    
    
    
    
    
    
    
    
    
    
    (227
    )
    
    
    
    
    
    
    Proceeds from stock options exercised and restricted stock activity
    
    
    
    
    
    
    307
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    66Recognition of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    4,520
    
    
    
    
    
    
    
    
    
    
    
    4,520Cash dividends declared on common shares  $0.290 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,959
    )
    
    
    
    
    
    
    (21,959
    )Shares purchased for taxes
    
    
    
    
    
    
    (32
    )
    
    
    (444
    )
    
    
    
    
    
    
    
    
    
    
    (444
    )Balance  December 31, 2008
    
    $
    266,088
    
    
    
    125,997
    
    
    $
    1,214,469
    
    
    $
    170,358
    
    
    $
    (49,594
    )
    
    $
    1,601,321Comprehensive income, net of tax:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (514,213
    )
    
    
    
    
    
    
    (514,213
    )Other comprehensive income (loss):Net unrealized gain on securities available-for-sale,
net of tax effect of ($24,572)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,626Net change in unrealized loss on qualifying cash flow hedges,
net of tax effect $3,478
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,459
    )Net change in unrecognized pension and post retirement costs,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,334net of tex effect of ($1,795)Other comprehensive income total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,501Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (471,712
    )Exchange of subordinated debt and trust preferred stock
for common stock, net of costs of $6,368
    
    
    
    
    
    
    268,216
    
    
    
    213,569
    
    
    
    
    
    
    
    
    
    
    
    213,569Cash dividend on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,875
    )
    
    
    
    
    
    
    (13,875
    )Accretion of preferred stock discount
    
    
    5,902
    
    
    
    
    
    
    
    
    
    
    
    (5,902
    )
    
    
    
    
    
    
    Proceeds from restricted stock activity
    
    
    
    
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Recognition of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,803
    
    
    
    
    
    
    
    
    
    
    
    1,803Shares purchased for taxes
    
    
    
    
    
    
    (51
    )
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    (70
    )Balance  December 31, 2009
    
    $
    271,990
    
    
    
    394,397
    
    
    $
    1,429,771
    
    
    $
    (363,632
    )
    
    $
    (7,093
    )
    
    $
    1,331,036
  70




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##### Table of Contents



Consolidated Statements of Cash Flows
Citizens Republic Bancorp and Subsidiaries
 Year Ended December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Operating Activities:Net (loss) income
    
    $
    (514,213
    )
    
    $
    (393,052
    )
    
    $
    100,842Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Provision for loan losses
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177Goodwill impairment
    
    
    266,474
    
    
    
    178,089
    
    
    
    Net increase in deferred tax asset valuation allowance
    
    
    79,788
    
    
    
    136,568
    
    
    
    Net (decrease) increase in current and deferred income taxes
    
    
    (95,138
    )
    
    
    (55,697
    )
    
    
    21,782Depreciation and software amortization
    
    
    12,472
    
    
    
    11,646
    
    
    
    13,108Amortization of intangibles
    
    
    7,036
    
    
    
    9,132
    
    
    
    11,534Amortization
and fair value adjustments of purchase accounting mark to market, net
    
    
    (10,270
    )
    
    
    (15,588
    )
    
    
    (24,847
    )Fair value adjustment on loans held for sale and other real estate
    
    
    26,307
    
    
    
    15,341
    
    
    
    Discount
accretion and amortization of issuance costs on long term debt
    
    
    1,062
    
    
    
    1,176
    
    
    
    978Net amortization (accretion) on investment securities
    
    
    803
    
    
    
    (4,509
    )
    
    
    (4,517
    )Net loss on debt extinguishment
    
    
    15,929
    
    
    
    
    
    
    
    Loans originated for sale
    
    
    (300,677
    )
    
    
    (280,475
    )
    
    
    (504,672
    )Proceeds from loans held for sale
    
    
    311,185
    
    
    
    328,500
    
    
    
    590,283Net gains from loan sales
    
    
    (7,280
    )
    
    
    (6,473
    )
    
    
    (9,036
    )Net loss (gain) on other real estate
    
    
    2,653
    
    
    
    2,068
    
    
    
    (866
    )Recognition of stock-based compensation expense
    
    
    1,803
    
    
    
    4,520
    
    
    
    3,355Restructure and merger related
    
    
    
    
    
    
    (3,260
    )
    
    
    (34,435
    )Other
    
    
    (7,884
    )
    
    
    (14,961
    )
    
    
    3,537Net cash provided by operating activities
    
    
    116,005
    
    
    
    195,079
    
    
    
    212,223Investing Activities:Net (decrease) increase in money market investments
    
    
    (491,238
    )
    
    
    (214,753
    )
    
    
    31Securities available-for-sale:Proceeds from sales
    
    
    1,945
    
    
    
    3
    
    
    
    364,421Proceeds from maturities and payments
    
    
    656,564
    
    
    
    453,033
    
    
    
    521,453Purchases
    
    
    (572,948
    )
    
    
    (610,964
    )
    
    
    (174,633
    )Securities held-to-maturity:Proceeds from maturities and payments
    
    
    1,508
    
    
    
    2,505
    
    
    
    Purchases
    
    
    
    
    
    
    (12,777
    )
    
    
    (19,387
    )Sale of branches, net of cash received
    
    
    
    
    
    
    
    
    
    
    (163,592
    )Net decrease (increase) in loans and leases
    
    
    900,129
    
    
    
    99,357
    
    
    
    (339,498
    )Proceeds from sales of other real estate
    
    
    43,347
    
    
    
    31,476
    
    
    
    13,385Net increase in properties and equipment
    
    
    (6,878
    )
    
    
    (6,771
    )
    
    
    (7,043
    )Net cash provided (used) by investing activities
    
    
    532,429
    
    
    
    (258,891
    )
    
    
    195,137Financing Activities:Net increase (decrease) in demand and savings deposits
    
    
    579,599
    
    
    
    297,122
    
    
    
    (95,886
    )Net (decrease) increase in time deposits
    
    
    (724,070
    )
    
    
    451,391
    
    
    
    (97,431
    )Net decrease in short-term borrowings
    
    
    (23,385
    )
    
    
    (466,613
    )
    
    
    (396,420
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    1,550,000
    
    
    
    1,591,750Principal reductions in long-term debt
    
    
    (475,191
    )
    
    
    (2,304,165
    )
    
    
    (1,295,537
    )Net proceeds from issuance of preferred convertible stock
    
    
    
    
    
    
    114,161
    
    
    
    Proceeds from issuance of preferred redeemable stock and warrant
    
    
    
    
    
    
    300,000
    
    
    
    Net proceeds from issuance of common stock
    
    
    
    
    
    
    74,844
    
    
    
    Cash dividends paid on common stock
    
    
    
    
    
    
    (21,959
    )
    
    
    (87,798
    )Cash dividends paid on preferred stock
    
    
    (13,875
    )
    
    
    
    
    
    
    Proceeds from stock options exercised and restricted stock activity
    
    
    
    
    
    
    66
    
    
    
    4,833Shares acquired for retirement and purchased for taxes
    
    
    (70
    )
    
    
    (444
    )
    
    
    (13,514
    )Net cash used by financing activities
    
    
    (656,992
    )
    
    
    (5,597
    )
    
    
    (390,003
    )Net (decrease) increase in cash and due from banks
    
    
    (8,558
    )
    
    
    (69,409
    )
    
    
    17,357Cash and due from banks at beginning of period
    
    
    171,695
    
    
    
    241,104
    
    
    
    223,747Cash and due from banks at end of period
    
    $
    163,137
    
    
    $
    171,695
    
    
    $
    241,104Supplemental Cash Flow Information:Interest paid
    
    $
    261,523
    
    
    $
    359,685
    
    
    $
    430,064Exchange of long-term debt for common stock
    
    
    209,067
    
    
    
    
    
    
    
    Exchange of subordinated debt and preferred stock for common stock
    
    
    (219,937
    )
    
    
    
    
    
    
    Income taxes (refund) paid, net
    
    
    (14,624
    )
    
    
    (9,902
    )
    
    
    9,523Loans transferred to other real estate owned
    
    
    53,320
    
    
    
    46,826
    
    
    
    37,868Loans transferred to held-for-sale
    
    
    35,221
    
    
    
    80,044
    
    
    
    Held for sale loans transferred to other real estate
    
    
    13,167
    
    
    
    12,453
    
    
    
    Deemed dividend on convertible preferred stock
    
    
    
    
    
    
    11,737
    
    
    
    Dividend on redeemable preferred stock
    
    
    5,902
    
    
    
    227
    
    
    
    
  71




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##### Table of Contents



Citizens Republic Bancorp, Inc.
 Notes To Consolidated Financial Statements
 December 31, 2009, 2008, and 2007
  Note 1. Summary of Significant Accounting Policies
  Basis of Financial Statement Presentation
   TM
  72




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##### Table of Contents



Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to
Repurchase
  Investment Securities
   Loans
  73




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##### Table of Contents



Allowance for Loan Losses
    Loans Held for Sale
  74




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##### Table of Contents



Premises and Equipment
   Other Real Estate Owned
  Bank Owned Life Insurance
  Goodwill and Core Deposit Intangible Assets
   75




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##### Table of Contents



Pension and Postretirement Benefits
   Fair Value Measurements
   76




---



##### Table of Contents



Derivative Instruments
        77




---



##### Table of Contents



Income Taxes
    Stock-Based Compensation
  Net Income per Common Share
  78




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##### Table of Contents



Cash and Cash Equivalents
  Reclassifications
  Note 2. Pending Accounting Pronouncements
 Accounting Standard Updates (ASU)
 Statements of Financial Accounting Standards (SFAS)
 FASB ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about
Fair Value Measurements
  SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (subsequently codified by ASU 2009-17,
Consolidations  Topic 810)
  SFAS No. 166, Accounting for Transfers of Financial Assets (subsequently codified by ASU 2009-16,
Transfers and Servicing  Topic 860)
  79




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##### Table of Contents



Note 3. Investment Securities
  December 31, 2009
    
    
    
    December 31, 2008Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Gross Unrealized
    
    
    Amortized
    
    
    Fair
    
    
    Gross Unrealized(in thousands)
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    Losses
    
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesSecurities available for sale:Federal agencies
    
    $
    145,782
    
    
    $
    149,033
    
    
    $
    3,251
    
    
    $
    
    
    
    $
    248,819
    
    
    $
    257,445
    
    
    $
    8,626
    
    
    $
    Collateralized mortgage obligations
    
    
    451,134
    
    
    
    442,989
    
    
    
    7,202
    
    
    
    15,347
    
    
    
    528,626
    
    
    
    471,010
    
    
    
    4,147
    
    
    
    61,763Mortgage-backed
    
    
    1,129,146
    
    
    
    1,164,450
    
    
    
    36,521
    
    
    
    1,217
    
    
    
    960,841
    
    
    
    973,961
    
    
    
    13,929
    
    
    
    809State and municipal
    
    
    439,587
    
    
    
    450,647
    
    
    
    11,741
    
    
    
    681
    
    
    
    531,625
    
    
    
    538,761
    
    
    
    10,990
    
    
    
    3,854Other
    
    
    17,951
    
    
    
    17,946
    
    
    
    
    
    
    
    5
    
    
    
    7,598
    
    
    
    7,595
    
    
    
    
    
    
    
    3Total available for sale
    
    $
    2,183,600
    
    
    $
    2,225,065
    
    
    $
    58,715
    
    
    $
    17,250
    
    
    $
    2,277,509
    
    
    $
    2,248,772
    
    
    $
    37,692
    
    
    $
    66,429Securities held to maturity:State and municipalTotal held to maturity
    
    $
    137,094
    
    
    $
    139,665
    
    
    $
    3,116
    
    
    $
    545
    
    
    $
    138,575
    
    
    $
    137,846
    
    
    $
    1,708
    
    
    $
    2,437FHLB and Fed Reserve stock
    
    $
    156,278
    
    
    $
    156,278
    
    
    $
    
    
    
    $
    
    
    
    $
    148,764
    
    
    $
    148,764
    
    
    $
    
    
    
    $
    
   December 31, 2009
    
    Amortized
    
    
    Estimated Fair(in thousands)
    
    Cost
    
    
    ValueSecurities available for sale:Federal agencies and state and municipalContractual maturity within one year
    
    $
    139,841
    
    
    $
    143,289After one year through five years
    
    
    146,717
    
    
    
    151,649After five years through ten years
    
    
    194,403
    
    
    
    199,441After ten years
    
    
    104,408
    
    
    
    105,301Subtotal
    
    
    585,369
    
    
    
    599,680Collateralized mortgage obligations and mortgage-backed
    
    
    1,580,280
    
    
    
    1,607,439Other
    
    
    17,951
    
    
    
    17,946Total available for sale
    
    $
    2,183,600
    
    
    $
    2,225,065Securities held to maturity:State and municipalAfter one year through five years
    
    $
    3,905
    
    
    $
    4,106After five years through ten years
    
    
    55,973
    
    
    
    57,611After ten years
    
    
    77,216
    
    
    
    77,948Total held to maturity
    
    $
    137,094
    
    
    $
    139,665
 80




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##### Table of Contents



December 31, 2009
    
    Less than 12 Months
    
    
    More than 12 Months
    
    
    TotalEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized(in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses| | | | | |Securities available for sale:Collateralized mortgage obligations
    
    $
    51,985
    
    
    $
    452
    
    
    $
    146,052
    
    
    $
    14,895
    
    
    $
    198,037
    
    
    $
    15,347Mortgage-backed
    
    
    110,191
    
    
    
    1,211
    
    
    
    264
    
    
    
    6
    
    
    
    110,455
    
    
    
    1,217State and municipal
    
    
    29,398
    
    
    
    402
    
    
    
    9,471
    
    
    
    279
    
    
    
    38,869
    
    
    
    681Other
    
    
    324
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    324
    
    
    
    5Total available for sale
    
    $
    191,898
    
    
    $
    2,070
    
    
    $
    155,787
    
    
    $
    15,180
    
    
    $
    347,685
    
    
    $
    17,250Securities held to maturity:State and municipalTotal held to maturity
    
    $
    20,271
    
    
    $
    319
    
    
    $
    2,290
    
    
    $
    226
    
    
    $
    22,561
    
    
    $
    545Total
    
    $
    212,169
    
    
    $
    2,389
    
    
    $
    158,077
    
    
    $
    15,406
    
    
    $
    370,246
    
    
    $
    17,795
 December 31, 2008
    
    Less than 12 Months
    
    
    More than 12 Months
    
    
    TotalEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized(in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses| | | | | |Securities available for sale:Collateralized mortgage obligations
    
    $
    231,892
    
    
    $
    61,436
    
    
    $
    3,085
    
    
    $
    327
    
    
    $
    234,977
    
    
    $
    61,763Mortgage-backed
    
    
    74,081
    
    
    
    796
    
    
    
    421
    
    
    
    13
    
    
    
    74,502
    
    
    
    809State and municipal
    
    
    112,353
    
    
    
    3,688
    
    
    
    3,220
    
    
    
    166
    
    
    
    115,573
    
    
    
    3,854Other
    
    
    7
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    3Total available for sale
    
    $
    418,333
    
    
    $
    65,923
    
    
    $
    6,726
    
    
    $
    506
    
    
    $
    425,059
    
    
    $
    66,429Securities held to maturity:State and municipalTotal held to maturity
    
    $
    51,896
    
    
    $
    1,967
    
    
    $
    6,481
    
    
    $
    470
    
    
    $
    58,377
    
    
    $
    2,437Total
    
    $
    470,229
    
    
    $
    67,890
    
    
    $
    13,207
    
    
    $
    976
    
    
    $
    483,436
    
    
    $
    68,866
  81




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##### Table of Contents



Note 4. Loans, Nonperforming Assets, Allowance for Loan Losses, and Loans Held for Sale
    December 31,(in thousands)
    
    2009
    
    
    2008Nonperforming portfolio loans:Nonaccrual
    
    $
    469,753
    
    
    $
    304,293Loans 90 days or more past due and still accruing
    
    
    3,039
    
    
    
    1,486Restructured loans and still accruing
    
    
    2,629
    
    
    
    256Total nonperforming portfolio loans
    
    
    475,421
    
    
    
    306,035Nonperforming loans held for sale
    
    
    65,247
    
    
    
    75,142Other repossessed assets acquired
    
    
    54,394
    
    
    
    58,037Total nonperforming assets
    
    $
    595,062
    
    
    $
    439,214
 82




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008
    
    
    2007Interest income:At contract rates
    
    $
    29,963
    
    
    $
    25,131
    
    
    $
    13,557As actually recognized
    
    
    6,801
    
    
    
    7,987
    
    
    
    6,307Interest foregone
    
    $
    23,162
    
    
    $
    17,144
    
    
    $
    7,250
  Valuation Reserve(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Balances at December 31Impaired loans with valuation reserve
    
    $
    162,962
    
    
    $
    101,671
    
    
    $
    52,840
    
    
    $
    39,885Impaired loans with no valuation reserve
    
    
    141,408
    
    
    
    87,330
    
    
    
    
    
    
    
    Total impaired loans
    
    $
    304,370
    
    
    $
    189,001
    
    
    $
    52,840
    
    
    $
    39,885Impaired loans on nonaccrual basis
    
    $
    304,370
    
    
    $
    189,001
    
    
    $
    52,840
    
    
    $
    39,885Impaired loans on accrual basis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total impaired loans
    
    $
    304,370
    
    
    $
    189,001
    
    
    $
    52,840
    
    
    $
    39,885Average balance for the year
    
    $
    318,709
    
    
    $
    113,553Interest income recognized for the year
    
    
    403
    
    
    
    Cash collected applied to outstanding principal
    
    
    11,560
    
    
    
    11,163
    (in thousands)
    
    2009
    
    
    2008
    
    
    2007Allowance for loan losses at January 1
    
    $
    255,321
    
    
    $
    163,353
    
    
    $
    169,104Provision for loan losses
    
    
    325,955
    
    
    
    282,054
    
    
    
    45,177Charge-offs
    
    
    (252,807
    )
    
    
    (197,932
    )
    
    
    (59,591
    )Recoveries
    
    
    13,901
    
    
    
    7,846
    
    
    
    8,663Net charge-offs
    
    
    (238,906
    )
    
    
    (190,086
    )
    
    
    (50,928
    )Allowance for loan losses at December 31
    
    $
    342,370
    
    
    $
    255,321
    
    
    $
    163,353Allowance for losses on lending-related commitments  December 31
    
    $
    3,166
    
    
    $
    3,941
    
    
    $
    5,571
 Loans Held for Sale.
 83




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##### Table of Contents



Note 5. Premises and Equipment
  December 31,(in thousands)
    
    2009
    
    
    2008Land
    
    $
    28,320
    
    
    $
    29,621Buildings
    
    
    163,637
    
    
    
    164,177Leasehold improvements
    
    
    13,718
    
    
    
    13,234Furniture and equipment
    
    
    132,739
    
    
    
    131,961338,414
    
    
    
    338,993Accumulated depreciation and amortization
    
    
    (221,319
    )
    
    
    (214,776
    )Total
    
    $
    117,095
    
    
    $
    124,217
  Rental(in thousands)
    
    Commitments2010
    
    $
    5,8682011
    
    
    4,7832012
    
    
    4,0992013
    
    
    3,3182014
    
    
    1,973Thereafter
    
    
    6,873Total
    
    $
    26,914
 Note 6. Goodwill and Core Deposit Intangible Assets
   84




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##### Table of Contents



Regional
    
    
    Specialty
    
    
    Wealth
    
    
    Total(in thousands)
    
    Banking
    
    
    Commercial
    
    
    Management
    
    
    GoodwillBalance at December 31, 2007
    
    $
    595,418
    
    
    $
    178,089
    
    
    $
    1,801
    
    
    $
    775,308Impairment Loss
    
    
    
    
    
    
    (178,089
    )
    
    
    
    
    
    
    (178,089
    )Tax Benefits on Share Based Payments
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Balance at December 31, 2008
    
    $
    595,417
    
    
    $
    
    
    
    $
    1,801
    
    
    $
    597,218Impairment Loss
    
    
    (266,474
    )
    
    
    
    
    
    
    
    
    
    
    (266,474
    )Balance at December 31, 2009
    
    $
    328,943
    
    
    $
    
    
    
    $
    1,801
    
    
    $
    330,744
  December 31,(in thousands)
    
    2009
    
    
    2008Core deposit intangibles
    
    $
    62,835
    
    
    $
    62,835Accumulated amortization
    
    
    (48,457
    )
    
    
    (41,421
    )Total other intangibles
    
    $
    14,378
    
    
    $
    21,414
  IntangibleAmortization(in thousands)
    
    Expense2010
    
    $
    3,9232011
    
    
    3,0272012
    
    
    2,1202013
    
    
    1,7272014
    
    
    1,421Thereafter
    
    
    2,160Total
    
    $
    14,378
  85




---



##### Table of Contents



Note 7. Deposits
  Deposit(in millions)
    
    Maturities2010
    
    $
    708.02011
    
    
    371.02012
    
    
    316.62013
    
    
    246.82014
    
    
    194.8Thereafter
    
    
    1.0Total
    
    $
    1,838.2
 Note 8. Short-Term Borrowings
   (in thousands)
    
    2009
    
    
    2008
    
    
    2007At December 31:Balance
    
    $
    43,780
    
    
    $
    64,072
    
    
    $
    486,934Weighted average interest rate paid
    
    
    0.33
    %
    
    
    0.47
    %
    
    
    3.89
    %During the year:Maximum outstanding at any month-end
    
    $
    60,873
    
    
    $
    662,726
    
    
    $
    1,274,000Daily average
    
    
    52,030
    
    
    
    303,931
    
    
    
    652,825Weighted average interest rate paid
    
    
    0.37
    %
    
    
    2.60
    %
    
    
    4.98
    %Weighted average interest rate paid, including effects of swaps
    
    
    0.37
    %
    
    
    2.60
    %
    
    
    4.77
    %
 86




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##### Table of Contents



Note 9. Long-Term Debt
  December 31,(in thousands)
    
    2009
    
    
    2008Citizens (Parent only):Subordinated debt:5.75% subordinated notes due February 2013
    
    $
    16,773
    
    
    $
    120,136Variable rate junior subordinated debenture due June 2033
    
    
    25,774
    
    
    
    25,7747.50% junior subordinated debentures due September 2066
    
    
    48,010
    
    
    
    146,927Subsidiaries:Federal Home Loan Bank advances
    
    
    1,318,700
    
    
    
    1,666,483Other borrowed funds
    
    
    104,230
    
    
    
    234,246Total long-term debt
    
    $
    1,513,487
    
    
    $
    2,193,566
     87




---



##### Table of Contents



Par Value of Long Term Debt(in thousands)
    
    Parent
    
    
    Subsidiaries
    
    
    Consolidated2010
    
    $
    
    
    
    $
    475,230
    
    
    $
    475,2302011
    
    
    
    
    
    
    300,022
    
    
    
    300,0222012
    
    
    
    
    
    
    187,847
    
    
    
    187,8472013
    
    
    17,266
    
    
    
    527
    
    
    
    17,7932014
    
    
    
    
    
    
    30
    
    
    
    30Thereafter
    
    
    74,451
    
    
    
    446,126
    
    
    
    520,577Total
    
    $
    91,717
    
    
    $
    1,409,782
    
    
    $
    1,501,499
 Note 10. Fair Values of Assets and Liabilities
    88




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##### Table of Contents



December 31, 2009
    
    December 31, 2008Carrying
    
    Estimated
    
    Carrying
    
    Estimated(in thousands)
    
    Amount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial assets:Cash and due from banks
    
    $
    163,137
    
    
    $
    163,137
    
    
    $
    171,695
    
    
    $
    171,695Money market investments
    
    
    706,163
    
    
    
    706,163
    
    
    
    214,925
    
    
    
    214,925Securities available for sale
    
    
    2,225,065
    
    
    
    2,225,065
    
    
    
    2,248,772
    
    
    
    2,248,772Securities held to maturity
    
    
    137,094
    
    
    
    139,665
    
    
    
    138,575
    
    
    
    137,846FHLB and Federal Reserve stock
    
    
    156,278
    
    
    
    156,278
    
    
    
    148,764
    
    
    
    148,764Net portfolio loans
    
    
    7,563,489
    
    
    
    6,545,517
    
    
    
    8,847,277
    
    
    
    7,606,291Deferred compensation assets
    
    
    11,138
    
    
    
    11,138
    
    
    
    10,652
    
    
    
    10,652Loans held for sale
    
    
    80,459
    
    
    
    80,459
    
    
    
    91,362
    
    
    
    91,362Accrued interest receivable
    
    
    43,270
    
    
    
    43,270
    
    
    
    55,663
    
    
    
    55,663Financial liabilities:Deposits
    
    
    8,909,340
    
    
    
    8,945,262
    
    
    
    9,052,406
    
    
    
    9,103,392Short-term borrowings
    
    
    51,063
    
    
    
    51,063
    
    
    
    74,449
    
    
    
    74,449Long-term debt
    
    
    1,513,487
    
    
    
    1,566,212
    
    
    
    2,193,566
    
    
    
    2,248,060Accrued interest payable
    
    
    10,292
    
    
    
    10,292
    
    
    
    20,268
    
    
    
    20,268Financial instruments with off-balance sheet risk(1):Letters of credit(2)
    
    
    (913
    )
    
    
    (5,185
    )
    
    
    (521
    )
    
    
    (6,080
    )Derivative instruments
    
    
    17,959
    
    
    
    17,959
    
    
    
    34,097
    
    
    
    34,097
 
 (1)
    
    Positive amounts represent assets, whereas negative amounts represent
liabilities.(2)
    
    The carrying amount for letters of credit is part of the total carrying amount of
net loans. It is shown here separately to disclose the estimated fair value which is based on a
discounted cash flow method utilizing current market pricing. This amount is not included in the
net loans estimate of fair value.  Securities Available for Sale.
 89




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##### Table of Contents



Securities Held to Maturity.
 Net Portfolio Loans.
 Deposits.
 Short-Term Borrowings.
 Long-Term Debt.
 Derivative Instruments.
 Deferred Compensation Assets.
 90




---



##### Table of Contents



Impaired Loans.
 Repossessed Assets.
 Mortgage Servicing Rights .
    December 31, 2009(in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Securities available for sale:Federal agencies
    
    $
    149,033
    
    
    $
    
    
    
    $
    149,033
    
    
    $
    Collateralized mortgage obligations
    
    
    442,989
    
    
    
    
    
    
    
    442,974
    
    
    
    15Mortgage-backed
    
    
    1,164,450
    
    
    
    
    
    
    
    1,164,450
    
    
    
    State and municipal
    
    
    450,647
    
    
    
    
    
    
    
    445,294
    
    
    
    5,353Other
    
    
    17,946
    
    
    
    
    
    
    
    17,623
    
    
    
    323Total securities available for sale
    
    
    2,225,065
    
    
    
    
    
    
    
    2,219,374
    
    
    
    5,691Other assets:Derivative instruments
    
    
    47,054
    
    
    
    
    
    
    
    47,054
    
    
    
    Deferred compensation assets
    
    
    11,138
    
    
    
    7,295
    
    
    
    3,843
    
    
    
    Total other assets
    
    
    58,192
    
    
    
    7,295
    
    
    
    50,897
    
    
    
    Total assets at fair value
    
    $
    2,283,257
    
    
    $
    7,295
    
    
    $
    2,270,271
    
    
    $
    5,691Other liabilities:Derivative instruments
    
    $
    29,095
    
    
    $
    
    
    
    $
    29,095
    
    
    $
    Total other liabilities
    
    
    29,095
    
    
    
    
    
    
    
    29,095
    
    
    
    Total liabilities at fair value
    
    $
    29,095
    
    
    $
    
    
    
    $
    29,095
    
    
    $
    
 91




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##### Table of Contents



Net Realized/Unrealized Gains (Losses)Recorded inBalance at
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Purchases, Sales
    
    
    Transfers
    
    
    Balance atDecember 31,
    
    
    Recorded in Earnings
    
    
    Comprehensive
    
    
    Issuances and
    
    
    In/(Out)
    
    
    December 31,(in thousands)
    
    2008
    
    
    Realized
    
    
    Unrealized
    
    
    Income (Pre-tax)
    
    
    Settlements, Net
    
    
    of Level 3, Net
    
    
    2009Securities available for saleCollateralized mortgage obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (2
    )
    
    $
    17
    
    
    $
    15State and municipal
    
    
    5,733
    
    
    
    145
    
    
    
    
    
    
    
    (55
    )
    
    
    (857
    )
    
    
    387
    
    
    
    5,353Other
    
    
    312
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323Total securitiesavailable for sale
    
    $
    6,045
    
    
    $
    156
    
    
    $
    
    
    
    $
    (55
    )
    
    $
    (859
    )
    
    $
    404
    
    
    $
    5,691
    December 31, 2009(in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Impaired loans (1)
    
    $
    177,696
    
    
    $
    
    
    
    $
    
    
    
    $
    177,696Commercial loans held for sale (2)
    
    
    18,653
    
    
    
    
    
    
    
    
    
    
    
    18,653Goodwill (3)
    
    
    330,744
    
    
    
    
    
    
    
    
    
    
    
    330,744Mortgage servicing rights (4)
    
    
    2,081
    
    
    
    
    
    
    
    
    
    
    
    2,081Other real estate (5)
    
    
    20,548
    
    
    
    
    
    
    
    
    
    
    
    20,548Repossessed assets (6)
    
    
    3,598
    
    
    
    
    
    
    
    
    
    
    
    3,598Total assets
    
    $
    553,320
    
    
    $
    
    
    
    $
    
    
    
    $
    553,320
 
 (1)
    
    Impaired loans with an initial carrying value of $378.7 million were
written down to their fair value of $177.7 million.(2)
    
    Commercial loans held for sale with an initial carrying value of $36.3 million were
written down to their fair value of $18.7 million.(3)
    
    Goodwill with an initial carrying
value of $597.2 million was written down to its fair value of $330.7 million.(4)
    
    Mortgage servicing rights with an initial carrying value of $2.2 million were
written down to their fair value of $2.1 million.(5)
    
    ORE properties with an initial
carrying value of $37.5 million were written down to their fair value of $20.5 million.(6)
    
    Repossessed assets with an initial carrying value of $8.0 million were written
down to their fair value of $3.6 million. Note 11. Employee Benefit Plans
 Pension and Postretirement Benefits
   92




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Cumulative Balanceat December 31,(in thousands)
    
    2009
    
    
    2008Defined Benefit Pension PlansPrior service cost
    
    $
    198
    
    
    $
    199Net actuarial loss
    
    
    32,906
    
    
    
    35,400Unrecognized balance
    
    
    33,104
    
    
    
    35,599Supplemental Pension PlansPrior service cost
    
    
    
    
    
    
    447Net actuarial loss (gain)
    
    
    534
    
    
    
    (12
    )Unrecognized balance
    
    
    534
    
    
    
    435Postretirement Benefit PlansPrior service credit
    
    
    (1,678
    )
    
    
    (1,120
    )Net actuarial gain
    
    
    (1,186
    )
    
    
    (806
    )Unrecognized balance
    
    
    (2,864
    )
    
    
    (1,926
    )Unrecognized net prior service credit
    
    $
    (1,480
    )
    
    $
    (474
    )Unrecognized net actuarial loss
    
    $
    32,254
    
    
    $
    34,582


93




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##### Table of Contents



Pension
    
    
    Supplemental
    
    
    PostretirementBenefits
    
    
    Pension Plan
    
    
    Benefits(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Change in Benefit ObligationProjected benefit obligation, beginning of year
    
    $
    75,705
    
    
    $
    78,421
    
    
    $
    12,173
    
    
    $
    12,949
    
    
    $
    9,986
    
    
    $
    10,195Interest cost
    
    
    4,366
    
    
    
    4,586
    
    
    
    588
    
    
    
    761
    
    
    
    571
    
    
    
    583Participant contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    337
    
    
    
    307Actuarial losses (gains)
    
    
    1,126
    
    
    
    (422
    )
    
    
    488
    
    
    
    (1,022
    )
    
    
    10
    
    
    
    60Plan amendments
    
    
    
    
    
    
    158
    
    
    
    
    
    
    
    
    
    
    
    (241
    )
    
    
    (114
    )Benefits paid
    
    
    (7,190
    )
    
    
    (7,038
    )
    
    
    (7,957
    )
    
    
    (515
    )
    
    
    (1,368
    )
    
    
    (1,045
    )Projected benefit obligation, end of year
    
    $
    74,007
    
    
    $
    75,705
    
    
    $
    5,292
    
    
    $
    12,173
    
    
    $
    9,295
    
    
    $
    9,986Accumulated benefit obligation, end of year
    
    $
    74,007
    
    
    $
    75,705
    
    
    $
    5,292
    
    
    $
    11,922
    
    
    $
    9,295
    
    
    $
    9,986Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    60,914
    
    
    $
    89,656
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    10,397
    
    
    
    (21,705
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employer contribution
    
    
    
    
    
    
    
    
    
    
    7,957
    
    
    
    515
    
    
    
    1,031
    
    
    
    738Participant contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    337
    
    
    
    307Benefits paid
    
    
    (7,190
    )
    
    
    (7,037
    )
    
    
    (7,957
    )
    
    
    (515
    )
    
    
    (1,368
    )
    
    
    (1,045
    )Fair value of plan assets, end of year
    
    $
    64,121
    
    
    $
    60,914
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Reconciliation of Funded StatusUnderfunded status of plan
    
    $
    (9,886
    )
    
    $
    (14,791
    )
    
    $
    (5,292
    )
    
    $
    (12,173
    )
    
    $
    (9,295
    )
    
    $
    (9,986
    )Net amount recognized in theconsolidated balance sheets
    
    $
    (9,886
    )
    
    $
    (14,791
    )
    
    $
    (5,292
    )
    
    $
    (12,173
    )
    
    $
    (9,295
    )
    
    $
    (9,986
    )


94




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008
    
    
    2007| | |Defined Benefit Pension PlansInterest cost
    
    $
    4,366
    
    
    $
    4,586
    
    
    $
    4,761Expected return on plan assets
    
    
    (6,282
    )
    
    
    (7,601
    )
    
    
    (7,709
    )Settlement charge related to lump sum payments
    
    
    
    
    
    
    
    
    
    
    832Amortization of unrecognized:Prior service cost
    
    
    26
    
    
    
    26
    
    
    
    11Net actuarial loss
    
    
    1,261
    
    
    
    194
    
    
    
    499Net pension cost
    
    
    (629
    )
    
    
    (2,795
    )
    
    
    (1,606
    )Supplemental Pension PlansInterest cost
    
    
    588
    
    
    
    761
    
    
    
    768Settlement charge related to lump sum payments
    
    
    455
    
    
    
    
    
    
    
    Curtailment loss
    
    
    941
    
    
    
    
    
    
    
    Amortization of unrecognized:Prior service cost
    
    
    
    
    
    
    471
    
    
    
    167Net actuarial loss
    
    
    12
    
    
    
    20
    
    
    
    130Net pension cost
    
    
    1,996
    
    
    
    1,252
    
    
    
    1,065Postretirement Benefit PlansService cost
    
    
    
    
    
    
    
    
    
    
    1Interest cost
    
    
    571
    
    
    
    583
    
    
    
    578Amortization of unrecognized:Prior service cost
    
    
    (267
    )
    
    
    (256
    )
    
    
    (256
    )Net actuarial gain
    
    
    (31
    )
    
    
    (37
    )
    
    
    (45
    )Net postretirement benefit cost
    
    
    273
    
    
    
    290
    
    
    
    278Total pension and postretirement benefit cost
    
    
    1,640
    
    
    
    (1,252
    )
    
    
    (264
    )Defined contribution retirement and 401(k) plansEmployer contributions
    
    
    2,253
    
    
    
    6,452
    
    
    
    6,533Total periodic benefit cost
    
    $
    3,893
    
    
    $
    5,199
    
    
    $
    6,270
  Pension
    
    
    Supplemental
    
    
    PostretirementBenefits
    
    
    Pension Plan
    
    
    Benefits2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Assumptions used to compute projected benefit obligationDiscount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    5.25
    %
    
    
    6.00
    %
    
    
    5.25
    %
    
    
    6.00
    %Rate of compensation increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.00
    
    
    
    
    
    
    
    Assumptions used to compute net benefit costsDiscount rate
    
    
    6.00
    
    
    
    6.00
    
    
    
    5.25
    
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00Expected return on plan assets
    
    
    8.25
    
    
    
    8.75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rate of compensation increase
    
    
    
    
    
    
    
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    
    
    
    
    


95




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##### Table of Contents



DefinedBenefit
    
    
    Supplemental
    
    
    Postretirement
    
    
    Total(in thousands)
    
    Pension Plan
    
    
    Pension Plan
    
    
    Benefit Plan
    
    
    Benefits2010
    
    $
    5,130
    
    
    $
    515
    
    
    $
    681
    
    
    $
    6,3262011
    
    
    5,407
    
    
    
    500
    
    
    
    686
    
    
    
    6,5932012
    
    
    5,259
    
    
    
    484
    
    
    
    690
    
    
    
    6,4332013
    
    
    5,163
    
    
    
    467
    
    
    
    758
    
    
    
    6,3882014
    
    
    5,394
    
    
    
    451
    
    
    
    751
    
    
    
    6,5962015 to 2019
    
    
    27,658
    
    
    
    1,923
    
    
    
    3,417
    
    
    
    32,998Total
    
    $
    54,011
    
    
    $
    4,340
    
    
    $
    6,983
    
    
    $
    65,334
  Investment Policy and Strategy
  Target
    
    2009Allocation
    
    AllocationAsset Category:Equity securities
    
    
    60
    %
    
    
    61
    %Debt securities
    
    
    34
    
    
    
    35Short-term pooled money fund
    
    
    6
    
    
    
    4100
    %
    
    
    100
    %


96




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##### Table of Contents



December 31, 2009(in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Asset CategoryShort-term pooled money fund
    
    $
    2,647
    
    
    $
    
    
    
    $
    2,647
    
    
    $
    Equity securitiesLarge cap (1)
    
    
    18,506
    
    
    
    
    
    
    
    18,506
    
    
    
    Mid-cap
    
    
    4,711
    
    
    
    
    
    
    
    4,711
    
    
    
    Small-cap
    
    
    6,578
    
    
    
    
    
    
    
    6,578
    
    
    
    International Equity
    
    
    9,518
    
    
    
    
    
    
    
    9,518
    
    
    
    Fixed income securitiesIntermediate term fixed (2)
    
    
    22,161
    
    
    
    
    
    
    
    22,161
    
    
    
    Total
    
    $
    64,121
    
    
    $
    
    
    
    $
    64,121
    
    
    $
    
 
 (1)
    
    This category is comprised of not actively managed low-cost equity index funds that track the S&P 500 and
Russell 1000.(2)
    
    This category represents investment grade bonds of U.S. issuers from diverse industries.   One Percentage
    
    
    One Percentage(in thousands)
    
    Point Increase
    
    
    Point DecreaseEffect on total of service and interest cost components
    
    $
    47
    
    
    $
    (42
    )Effect on the postretirement benefit obligation
    
    
    809
    
    
    
    (721
    )
 Defined Contribution Retirement and 401(k) Plans
 Note 12. Stock-Based Compensation
   97




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##### Table of Contents



Analysis of Stock-Based Compensation Expense(in thousands)
    
    2009
    
    
    2008
    
    
    2007| | |Stock option compensation
    
    $
    11
    
    
    $
    24
    
    
    $
    34Restricted stock compensation
    
    
    1,792
    
    
    
    4,496
    
    
    
    3,321Stock-based compensation expense before income taxes
    
    
    1,803
    
    
    
    4,520
    
    
    
    3,355Income tax benefit (1)
    
    
    (631
    )
    
    
    (1,582
    )
    
    
    (1,174
    )Total stock-based compensation expense after income taxes
    
    $
    1,172
    
    
    $
    2,938
    
    
    $
    2,181
 
 (1)
    
    The income tax benefit is calculated based on the statutory rate. Due to
the fact that Citizens has a valuation allowance, the income tax benefit may not be realized.
Refer to Note 13 for additional information.    Options
    
    
    WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1, 2007
    
    
    4,775,700
    
    
    $
    24.95Exercised
    
    
    (452,863
    )
    
    
    13.57Forfeitures or Expirations
    
    
    (292,795
    )
    
    
    27.75Outstanding at December 31, 2007
    
    
    4,030,042
    
    
    
    26.03Exercised
    
    
    (12,134
    )
    
    
    11.77Forfeitures or Expirations
    
    
    (567,251
    )
    
    
    25.24Outstanding at December 31, 2008
    
    
    3,450,657
    
    
    
    26.21Forfeitures or Expirations
    
    
    (383,909
    )
    
    
    26.15Outstanding at December 31, 2009
    
    
    3,066,748
    
    
    $
    26.22
    
    
    2.8 yrs
    
    $
    Exercisable
    
    
    3,066,676
    
    
    $
    26.21
    
    
    2.8 yrs
    
    $
    
  98




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008
    
    
    2007Tax benefit realized from reduction of income tax payable:Reduction of goodwill for tax benefit of vested stock options
converted in Republic acquisition and exercised
    
    $
    
    
    
    $
    1
    
    
    $
    904Included in common stock as net stock options exercised
    
    
    
    
    
    
    (76
    )
    
    
    (106
    )Tax benefit from vested stock options converted in Republic
acquisition and exercised
    
    $
    
    
    
    $
    (75
    )
    
    $
    798
   Weighted-AverageNumber of
    
    
    Per Share GrantShares
    
    
    Date Fair ValueRestricted stock at January 1, 2007
    
    
    293,087
    
    
    $
    25.13Granted
    
    
    324,441
    
    
    
    19.38Vested
    
    
    (88,542
    )
    
    
    24.92Forfeited
    
    
    (42,144
    )
    
    
    25.27Restricted stock at December 31, 2007
    
    
    486,842
    
    
    
    21.32Granted
    
    
    338,995
    
    
    
    8.56Vested
    
    
    (171,197
    )
    
    
    22.02Forfeited
    
    
    (45,608
    )
    
    
    15.80Restricted stock at December 31, 2008
    
    
    609,032
    
    
    
    14.43Granted
    
    
    384,818
    
    
    
    1.29Vested
    
    
    (225,151
    )
    
    
    15.58Forfeited
    
    
    (149,940
    )
    
    
    12.31Restricted stock at December 31, 2009
    
    
    618,759
    
    
    $
    6.35
  Note 13. Income Taxes
  99




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008
    
    
    2007Current tax (benefit) expense:Federal
    
    $
    (7,993
    )
    
    $
    (19,351
    )
    
    $
    10,913State
    
    
    (895
    )
    
    
    (684
    )
    
    
    151Total current tax (benefit) expense
    
    
    (8,888
    )
    
    
    (20,035
    )
    
    
    11,064Deferred tax (benefit) expense
    
    
    (100,874
    )
    
    
    (45,563
    )
    
    
    20,241Change in valuation allowance
    
    
    79,788
    
    
    
    136,568
    
    
    
    Total income tax (benefit) expense
    
    $
    (29,974
    )
    
    $
    70,970
    
    
    $
    31,305
   December 31,(in thousands)
    
    2009
    
    
    2008Deferred tax assets:Allowance for loan losses
    
    $
    122,804
    
    
    $
    91,060Accrued postemployment benefits other than pensions
    
    
    4,419
    
    
    
    4,365Deferred compensation
    
    
    6,057
    
    
    
    9,662Accrued expenses
    
    
    4,176
    
    
    
    9,037Net operating loss carryforwards
    
    
    91,378
    
    
    
    9,621Tax credit carryforwards
    
    
    3,411
    
    
    
    12,483Minimum pension liability
    
    
    11,379
    
    
    
    13,175Purchase accounting adjustments
    
    
    16,830
    
    
    
    21,840Unrealized losses on securities and derivatives
    
    
    
    
    
    
    3,222Other deferred tax assets
    
    
    12,281
    
    
    
    6,329Deferred tax assets
    
    
    272,735
    
    
    
    180,794Deferred tax liabilities:Pension
    
    
    8,998
    
    
    
    8,723Acquisition premium on loans
    
    
    2,193
    
    
    
    3,268Fixed assets
    
    
    1,852
    
    
    
    4,563Basis difference in FHLB stock
    
    
    3,637
    
    
    
    3,618Purchase accounting adjustments
    
    
    975
    
    
    
    2,452Tax deductible goodwill
    
    
    13,986
    
    
    
    12,183Unrealized gains on securities and derivatives
    
    
    17,872
    
    
    
    Mortgage servicing rights
    
    
    747
    
    
    
    1,033Other deferred tax liabilities
    
    
    962
    
    
    
    1,426Deferred tax liabilities
    
    
    51,222
    
    
    
    37,266Net deferred tax assets
    
    
    221,513
    
    
    
    143,528Valuation allowance
    
    
    (235,499
    )
    
    
    (155,711
    )Total net deferred tax liabilities
    
    $
    (13,986
    )
    
    $
    (12,183
    )
 100




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008
    
    
    2007Tax at federal statutory rate applied to income before income taxes
    
    $
    (190,466
    )
    
    $
    (112,728
    )
    
    $
    46,252Increase (decrease) in taxes resulting from:Tax-exempt income
    
    
    (9,803
    )
    
    
    (10,764
    )
    
    
    (10,694
    )Officers life insurance
    
    
    (1,114
    )
    
    
    (1,508
    )
    
    
    (2,934
    )Goodwill impairment
    
    
    93,266
    
    
    
    62,331
    
    
    
    Net change in valuation allowance
    
    
    79,788
    
    
    
    136,568
    
    
    
    Other
    
    
    (1,645
    )
    
    
    (2,929
    )
    
    
    (1,319
    )Total income tax (benefit) expense
    
    $
    (29,974
    )
    
    $
    70,970
    
    
    $
    31,305
  (in thousands)
    
    2009
    
    
    2008
    
    
    2007Balance at January 1
    
    $
    1,852
    
    
    $
    7,093
    
    
    $
    6,786Additions based on tax positions related to the current year
    
    
    
    
    
    
    34
    
    
    
    1,158Additions for tax positions of prior years
    
    
    
    
    
    
    
    
    
    
    1,244Reductions for tax positions of prior years
    
    
    (28
    )
    
    
    (1,436
    )
    
    
    (892
    )Reductions due to the statute of limitations
    
    
    (302
    )
    
    
    
    
    
    
    (269
    )Settlements
    
    
    
    
    
    
    (3,839
    )
    
    
    (934
    )Balance at December 31
    
    $
    1,522
    
    
    $
    1,852
    
    
    $
    7,093
 101




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##### Table of Contents



Jurisdiction
    
    Tax YearsFederal
    
    
    2006 - 2009Indiana
    
    
    2003 - 2009Wisconsin
    
    
    2002 - 2009Iowa
    
    
    2003 - 2009
 Note 14. Shareholders Equity and Earnings Per Share
     102




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##### Table of Contents



(in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007Numerator:Basic and dilutive earnings per share  net (loss) income
    
    $
    (514,213
    )
    
    $
    (393,052
    )
    
    $
    100,842Deemed dividend on convertible preferred stock
    
    
    
    
    
    
    (11,737
    )
    
    
    Dividend on redeemable preferred stock
    
    
    (19,777
    )
    
    
    (227
    )
    
    
    Net (loss) income available to common shareholders
    
    
    (533,990
    )
    
    
    (405,016
    )
    
    
    100,842Net (loss) income allocated to participating securities
    
    
    
    
    
    
    
    
    
    
    523Net (loss) income allocated to common shareholders
    
    
    (533,990
    )
    
    
    (405,016
    )
    
    
    100,319Weighted average shares outstanding
    
    
    194,577
    
    
    
    94,731
    
    
    
    75,733Less: Participating securities included in weighted average shares outstanding
    
    
    (744
    )
    
    
    (575
    )
    
    
    (393
    )Weighted average shares outstanding for basic earnings per common share
    
    
    193,833
    
    
    
    94,156
    
    
    
    75,340Effect of dilutive securities  potential conversion of employee stock options and restricted stock awards
    
    
    
    
    
    
    
    
    
    
    183Weighted average shares outstanding for dilutive earnings per common share
    
    
    193,833
    
    
    
    94,156
    
    
    
    75,523Basic (loss) earnings per common share
    
    $
    (2.75
    )
    
    $
    (4.30
    )
    
    $
    1.33Diluted (loss) earnings per common share
    
    $
    (2.75
    )
    
    $
    (4.30
    )
    
    $
    1.33
 Stock Repurchase Program:
 Note 15. Lines of Business
  103




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##### Table of Contents




    
    Regional Banking Regional Banking provides a wide range of lending, depository, and other
related financial services to both individual consumers and businesses. The products and
services offered to consumer clients include: direct loans, home equity loans and lines of
credit, checking, savings and money market accounts, certificates of deposit, and fixed and
variable annuities, as well as private banking services for affluent clients. Citizens
partners with outside providers to offer to consumer clients the availability of nationwide
ATM, debit, and credit card networks as well as mortgage origination services. The
transaction-based income and expense associated with these services are included in Regional
Banking. The products and services offered to commercial and industrial clients include:
term loans, revolving credit arrangements, inventory and accounts receivable financing,
commercial mortgages, letters of credit, and small business loans. Noncredit services for
commercial clients include deposit accounts, treasury management, corporate cash management,
international banking services, advice and assistance in the placement of securities, and
financial planning.
    
    Specialty Consumer Specialty Consumer includes the indirect consumer and the residential
mortgage portfolios. The indirect lending team partners with dealerships across the Midwest
to provide primarily marine and recreational vehicle loans to consumers. As nearly all of new
mortgage volume is originated through the Regional Banking delivery channel and sold into the
secondary market, the residential mortgage loan portfolio residing in Specialty Consumer
consists primarily of historical loan production as well as the minimal new production that is
retained.
    
    Specialty Commercial Specialty Commercial provides a full range of lending, depository,
and related financial services to commercial real estate developers, owners of multi-unit
commercial properties, middle-market companies, local governments and municipalities.
Products and services offered include commercial mortgages, real estate construction lending,
term loans, revolving credit arrangements, inventory and accounts receivable financing, and
letters of credit. Noncredit services for these customers include deposit accounts, treasury
management, corporate cash management, international banking services, advice and assistance
in the placement of securities, and financial planning.
    
    Wealth Management Wealth Management offers a broad array of asset management, financial
planning, estate settlement and administration, credit and deposit products and services.
Trust and investment services include personal trust and planning, investment management,
estate settlement and administration services. Retirement plan services focus on investment
management and fiduciary activities with special emphasis on 401(k) plans. Brokerage and
insurance delivers retail mutual funds, other securities, variable and fixed annuities,
personal disability and life insurance products and discounted brokerage services.
    
    Other The Other line of business includes activities that are not directly attributable
to one of the primary business lines. Included in this category are the Holding Company;
shared services unit; Citizens treasury unit, including the securities portfolio, short-term
borrowing and asset/liability management activities; inter-company eliminations; and the
economic impact of certain assets, capital and support functions not specifically identifiable
with the four primary lines of business.
  104




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##### Table of Contents



Line of Business InformationRegional
    
    
    Specialty
    
    
    Specialty
    
    
    Wealth(in thousands)
    
    Banking
    
    
    Consumer
    
    
    Commercial
    
    
    Mgmt
    
    
    Other
    
    
    TotalEarnings Summary  2009Net interest income (taxable equivalent)
    
    $
    276,108
    
    
    $
    25,500
    
    
    $
    64,155
    
    
    $
    585
    
    
    $
    (32,530
    )
    
    $
    333,818Provision for loan losses
    
    
    105,784
    
    
    
    80,366
    
    
    
    139,805
    
    
    
    
    
    
    
    
    
    
    
    325,955Net interest income after provision
    
    
    170,324
    
    
    
    (54,866
    )
    
    
    (75,650
    )
    
    
    585
    
    
    
    (32,530
    )
    
    
    7,863Noninterest income
    
    
    73,381
    
    
    
    31
    
    
    
    (16,438
    )
    
    
    20,501
    
    
    
    (10,054
    )
    
    
    67,421Noninterest expense (1)
    
    
    495,615
    
    
    
    47,609
    
    
    
    17,411
    
    
    
    16,794
    
    
    
    25,592
    
    
    
    603,021(Loss) Income before income taxes
    
    
    (251,910
    )
    
    
    (102,444
    )
    
    
    (109,499
    )
    
    
    4,292
    
    
    
    (68,176
    )
    
    
    (527,737
    )Income tax (benefit) provision (taxable equivalent)
    
    
    (88,169
    )
    
    
    (35,855
    )
    
    
    (38,325
    )
    
    
    1,502
    
    
    
    147,323
    
    
    
    (13,524
    )Net (loss) income
    
    $
    (163,741
    )
    
    $
    (66,589
    )
    
    $
    (71,174
    )
    
    $
    2,790
    
    
    $
    (215,499
    )
    
    $
    (514,213
    )Average assets(in millions)
    
    $
    5,120
    
    
    $
    2,206
    
    
    $
    1,625
    
    
    $
    12
    
    
    $
    3,520
    
    
    $
    12,483Earnings Summary  2008Net interest income (taxable equivalent)
    
    $
    273,987
    
    
    $
    33,690
    
    
    $
    64,112
    
    
    $
    43
    
    
    $
    (4,498
    )
    
    $
    367,334Provision for loan losses
    
    
    96,286
    
    
    
    58,775
    
    
    
    126,993
    
    
    
    
    
    
    
    
    
    
    
    282,054Net interest income after provision
    
    
    177,701
    
    
    
    (25,085
    )
    
    
    (62,881
    )
    
    
    43
    
    
    
    (4,498
    )
    
    
    85,280Noninterest income
    
    
    77,357
    
    
    
    674
    
    
    
    (7,596
    )
    
    
    25,037
    
    
    
    6,270
    
    
    
    101,742Noninterest expense (1)
    
    
    221,738
    
    
    
    30,461
    
    
    
    197,393
    
    
    
    24,239
    
    
    
    16,871
    
    
    
    490,702(Loss) Income before income taxes
    
    
    33,320
    
    
    
    (54,872
    )
    
    
    (267,870
    )
    
    
    841
    
    
    
    (15,099
    )
    
    
    (303,680
    )Income tax provision (taxable equivalent)
    
    
    11,662
    
    
    
    (19,205
    )
    
    
    (93,755
    )
    
    
    294
    
    
    
    190,376
    
    
    
    89,372Net (loss) income
    
    $
    21,658
    
    
    $
    (35,667
    )
    
    $
    (174,115
    )
    
    $
    547
    
    
    $
    (205,475
    )
    
    $
    (393,052
    )Average assets(in millions)
    
    $
    5,993
    
    
    $
    2,370
    
    
    $
    2,039
    
    
    $
    13
    
    
    $
    2,827
    
    
    $
    13,242Earnings Summary  2007Net interest income (taxable equivalent)
    
    $
    290,113
    
    
    $
    38,649
    
    
    $
    69,140
    
    
    $
    (45
    )
    
    $
    2,869
    
    
    $
    400,726Provision for loan losses
    
    
    17,736
    
    
    
    9,054
    
    
    
    18,387
    
    
    
    
    
    
    
    
    
    
    
    45,177Net interest income after provision
    
    
    272,377
    
    
    
    29,595
    
    
    
    50,753
    
    
    
    (45
    )
    
    
    2,869
    
    
    
    355,549Noninterest income
    
    
    81,040
    
    
    
    2,100
    
    
    
    2,341
    
    
    
    27,410
    
    
    
    9,677
    
    
    
    122,568Noninterest expense
    
    
    221,965
    
    
    
    19,652
    
    
    
    17,595
    
    
    
    22,246
    
    
    
    45,965
    
    
    
    327,423Income before income taxes
    
    
    131,452
    
    
    
    12,043
    
    
    
    35,499
    
    
    
    5,119
    
    
    
    (33,420
    )
    
    
    150,694Income tax provision (taxable equivalent)
    
    
    46,008
    
    
    
    4,215
    
    
    
    12,425
    
    
    
    1,792
    
    
    
    (14,588
    )
    
    
    49,852Net income
    
    $
    85,444
    
    
    $
    7,828
    
    
    $
    23,074
    
    
    $
    3,327
    
    
    $
    (18,832
    )
    
    $
    100,842Average assets (in millions)
    
    $
    6,183
    
    
    $
    2,082
    
    
    $
    2,005
    
    
    $
    13
    
    
    $
    3,037
    
    
    $
    13,320
 
 (1)
    
    Noninterest expense  includes the $266.5 million goodwill
impairment charge for Regional Banking in 2009 and
$178.1 million for Specialty Commercial in 2008 Note 16. Commitments, Contingent Liabilities and Guarantees
 Commitments:
 105




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##### Table of Contents



December 31,(in thousands)
    
    2009
    
    
    2008Loan commitments and letters of credit:Commitments to extend credit
    
    $
    1,371,626
    
    
    $
    2,048,258Financial standby letters of credit
    
    
    228,483
    
    
    
    225,675Performance standby letters of credit
    
    
    7,523
    
    
    
    21,692Commercial letters of credit
    
    
    23
    
    
    
    $
    1,607,655
    
    
    $
    2,295,625
   Contingent Liabilities and Guarantees:
 Purchase Obligations:
 Change in Control Agreements:
 Note 17. Derivatives and Hedging Activities
 Risk Management Objective of Using Derivatives
  106




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##### Table of Contents



Fair Values of Derivative Instruments on the Consolidated Balance Sheets
  Fair Value of Derivatives
 Other Assets
    
    
    Other LiabilitiesDecember 31,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Derivatives designated as hedging
instruments under FASB ASC 815 Interest rate products
    
    $
    17,279
    
    
    $
    30,984
    
    
    $
    
    
    
    $
    Derivatives notdesignated as hedging
instruments under FASB ASC 815 Interest rate products
    
    
    29,775
    
    
    
    47,950
    
    
    
    29,095
    
    
    
    44,837Total derivatives
    
    $
    47,054
    
    
    $
    78,934
    
    
    $
    29,095
    
    
    $
    44,837
 Cash Flow Hedges of Interest Rate Risk
     107




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##### Table of Contents



Derivative Impact on OCI Gain (Loss)

    
    Derivative Ineffectiveness Gain (Loss)Location
    
    
    
    
    
    
    
    
    
    LocationReclassified in
    
    Reclassified from
    
    
    Recognized inDerivatives Relationship
    
    
    
    
    
    
    
    
    
    Statement of
    
    Accumulated OCI into
    
    
    Statement of(in thousands)
    
    Recognized in OCI
    
    
    Operations
    
    Statement of Operations
    
    
    Operations
    
    AmountDecember 31,

    
    
    
    
    December 31,
    
    
    
    
    December 31,2009
    
    
    2008
    
    
    
    
    2009
    
    
    2008
    
    
    
    
    2009
    
    
    2008Cash flow hedges:Interest rate products
    
    $
    2,936
    
    
    $
    23,366
    
    
    Interest income
    
    $
    12,629
    
    
    $
    3,591Other income
    
    
    244
    
    
    
    196
    
    
    Other income
    
    $
    
    
    
    $
    Total
    
    $
    2,936
    
    
    $
    23,366
    
    
    
    
    $
    12,873
    
    
    $
    3,787
    
    
    
    
    $
    
    
    
    $
    
 Fair Value Hedges of Interest Rate Risk
    Derivative Contract (Loss) Gain
    
    
    Hedged Item Gain (Loss)Location in
    
    
    
    
    
    
    
    
    
    Location inDerivatives Relationship
    
    Statement of
    
    
    
    
    
    
    
    
    
    Statement of(in thousands)
    
    Operations
    
    2009
    
    
    2008
    
    
    Operations
    
    2009
    
    
    2008Fair value hedges:Interest rate products
    
    Interest expense
    
    $
    (3,846
    )
    
    $
    8,202
    
    
    Interest expense
    
    $
    10,151
    
    
    $
    (8,202
    )
 Non-designated Hedges
  108




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##### Table of Contents



Amount of (Loss) GainRecognized in Statementof OperationsLocation of (Loss)Gain Recognized inDerivatives Relationship
    
    Statement of(in thousands)
    
    Operations
    
    2009
    
    2008Derivatives notdesignated 
as hedgesInterest rate products
    
    Other income
    
    $
    (661
    )
    
    $
    3,194
 Credit-Risk-Related Contingent Features
     109




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##### Table of Contents



Note 18. Regulatory Matters
       110




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##### Table of Contents



Risk Based Capital RequirementsActual
    
    Adequately Capitalized
    
    Well-Capitalized(in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    
    
    
    
    Ratio
    
    Amount
    
    RatioCitizens Republic BancorpAs of December 31, 2009Total Capital to risk weighted assets (1)
    
    $
    1,186,174
    
    
    
    13.9
    %
    
    $
    681,270
    
    
    
    >
    
    
    
    8.0
    %
    
    $
    851,587
    
    
    
    >
    
    
    
    10.0
    %Tier 1 Capital to risk weighted assets(1)
    
    
    1,066,414
    
    
    
    12.5
    
    
    
    340,635
    
    
    
    >
    
    
    
    4.0
    
    
    
    510,952
    
    
    
    >
    
    
    
    6.0Tier 1 Leverage (2)
    
    
    1,066,414
    
    
    
    9.2
    
    
    
    463,376
    
    
    
    >
    
    
    
    4.0
    
    
    
    579,220
    
    
    
    >
    
    
    
    5.0As of December 31, 2008:Total Capital to risk weighted assets (1)
    
    
    1,432,080
    
    
    
    14.5
    
    
    
    790,628
    
    
    
    >
    
    
    
    8.0
    
    
    
    988,285
    
    
    
    >
    
    
    
    10.0Tier 1 Capital to risk weighted assets (1)
    
    
    1,206,869
    
    
    
    12.2
    
    
    
    395,314
    
    
    
    >
    
    
    
    4.0
    
    
    
    592,971
    
    
    
    >
    
    
    
    6.0Tier 1 Leverage (2)
    
    
    1,206,869
    
    
    
    9.7
    
    
    
    499,613
    
    
    
    >
    
    
    
    4.0
    
    
    
    624,517
    
    
    
    >
    
    
    
    5.0Citizens BankAs of December 31, 2009Total Capital to risk weighted assets (1)
    
    $
    1,024,154
    
    
    
    12.3
    %
    
    $
    666,647
    
    
    
    >
    
    
    
    8.0
    %
    
    $
    833,309
    
    
    
    >
    
    
    
    10.0
    %Tier 1 Capital to risk weighted assets (1)
    
    
    917,063
    
    
    
    11.0
    
    
    
    333,324
    
    
    
    >
    
    
    
    4.0
    
    
    
    499,986
    
    
    
    >
    
    
    
    6.0Tier 1 Leverage (2)
    
    
    917,063
    
    
    
    8.2
    
    
    
    449,080
    
    
    
    >
    
    
    
    4.0
    
    
    
    561,350
    
    
    
    >
    
    
    
    5.0As of December 31, 2008:Total Capital to risk weighted assets (1)
    
    
    1,177,172
    
    
    
    12.1
    
    
    
    777,397
    
    
    
    >
    
    
    
    8.0
    
    
    
    971,746
    
    
    
    >
    
    
    
    10.0Tier 1 Capital to risk weighted assets (1)
    
    
    1,054,035
    
    
    
    10.8
    
    
    
    388,698
    
    
    
    >
    
    
    
    4.0
    
    
    
    583,048
    
    
    
    >
    
    
    
    6.0Tier 1 Leverage (2)
    
    
    1,054,035
    
    
    
    8.7
    
    
    
    487,181
    
    
    
    >
    
    
    
    4.0
    
    
    
    608,976
    
    
    
    >
    
    
    
    5.0
 
 (1)
    
    Total Capital is comprised of Tier 1 Capital, a portion of the allowance for loan losses and qualifying subordinated debt. Tier 1 Capital is calculated as
follows: total shareholders equity + trust preferred securities  goodwill  accumulated other comprehensive income (loss)  other intangible assets.(2)
    
    Tier 1 Capital to quarterly average assets. 111




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##### Table of Contents



Note 19. Citizens Republic Bancorp (Parent Only) Statements
 Balance SheetsCitizens Republic Bancorp (Parent Only)December 31,(in thousands)
    
    2009
    
    
    2008AssetsCash and due from banks
    
    $
    2,957
    
    
    $
    7,754Money market investments
    
    
    107,713
    
    
    
    253,637Investment securities
    
    
    5,295
    
    
    
    6,054Investment in subsidiaries
    
    
    1,058,109
    
    
    
    1,182,374Goodwill
    
    
    250,672
    
    
    
    492,488Other assets
    
    
    12,297
    
    
    
    11,671Total assets
    
    $
    1,437,043
    
    
    $
    1,953,978Liabilities and Shareholders EquityLong-term debt
    
    $
    90,557
    
    
    $
    292,837Other liabilities
    
    
    15,450
    
    
    
    59,820Total liabilities
    
    
    106,007
    
    
    
    352,657Shareholders equity
    
    
    1,331,036
    
    
    
    1,601,321Total liabilities and shareholders equity
    
    $
    1,437,043
    
    
    $
    1,953,978
 Statements of Operations
Citizens Republic Bancorp (Parent Only)
 (in thousands)
    
    2009
    
    
    2008
    
    
    2007IncomeDividends from subsidiaries
    
    $
    
    
    
    $
    28,500
    
    
    $
    111,500Interest on taxable investment securities
    
    
    289
    
    
    
    
    
    
    
    Interest from bank subsidiary
    
    
    4,118
    
    
    
    5,368
    
    
    
    3,118Service fees from bank subsidiaries
    
    
    13,825
    
    
    
    14,526
    
    
    
    14,334Other
    
    
    (15,286
    )
    
    
    (3,257
    )
    
    
    (53
    )Total
    
    
    2,946
    
    
    
    45,137
    
    
    
    128,899ExpensesInterest
    
    
    17,722
    
    
    
    23,742
    
    
    
    25,637Salaries and employee benefits
    
    
    17,817
    
    
    
    18,481
    
    
    
    20,922Service fees paid to bank subsidiaries
    
    
    955
    
    
    
    955
    
    
    
    2,767Restructuring and merger related expenses
    
    
    
    
    
    
    
    
    
    
    270Goodwill impairment
    
    
    241,817
    
    
    
    161,611
    
    
    
    Other noninterest expense
    
    
    1,490
    
    
    
    2,301
    
    
    
    2,231Total
    
    
    279,801
    
    
    
    207,090
    
    
    
    51,827(Loss) income before income tax (benefit) provision and
equity in undistributed (loss) income
    
    
    (276,855
    )
    
    
    (161,951
    )
    
    
    77,072Income tax (benefit) provision
    
    
    (2,241
    )
    
    
    11,785
    
    
    
    (12,650
    )Equity in undistributed net (loss) income of subsidiaries
    
    
    (239,599
    )
    
    
    (219,316
    )
    
    
    11,120Net (loss) income
    
    
    (514,213
    )
    
    
    (393,052
    )
    
    
    100,842Deemed divided on convertible preferred stock
    
    
    
    
    
    
    (11,737
    )
    
    
    Dividend on redeemable preferred stock
    
    
    (19,777
    )
    
    
    (227
    )
    
    
    Net (loss) income attributable to common shareholders
    
    $
    (533,990
    )
    
    $
    (405,016
    )
    
    $
    100,842
 112




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##### Table of Contents



Statements of Cash Flows
Citizens Republic Bancorp (Parent Only)
 (in thousands)
    
    2009
    
    
    2008
    
    
    2007Operating ActivitiesNet (loss) income
    
    $
    (514,213
    )
    
    $
    (393,052
    )
    
    $
    100,842Adjustments to reconcile net income (loss) to net cash provided by operating activities:Goodwill impairment
    
    
    241,817
    
    
    
    161,611
    
    
    
    Deferred tax asset valuation allowance
    
    
    (1,020
    )
    
    
    20,853
    
    
    
    Net decrease (increase) in current and deferred income taxes
    
    
    70
    
    
    
    (18,476
    )
    
    
    21,306(Decrease) increase in long-term debt interest
    
    
    (2,919
    )
    
    
    (720
    )
    
    
    651(Decrease) in pension non-qualified
    
    
    (6,874
    )
    
    
    (738
    )
    
    
    (1,671
    )Net loss on debt extinguishment
    
    
    15,929
    
    
    
    
    
    
    
    Recognition of stock-based compensation expense
    
    
    1,803
    
    
    
    4,520
    
    
    
    3,355Restructure and merger-related expense
    
    
    
    
    
    
    (53
    )
    
    
    (27,257
    )Decrease (increase) in equity in undistributed net (loss) income of subsidiaries
    
    
    239,599
    
    
    
    219,316
    
    
    
    (11,120
    )Other
    
    
    (4,345
    )
    
    
    311
    
    
    
    3,841Net cash (used) provided by operating activities
    
    
    (30,153
    )
    
    
    (6,428
    )
    
    
    89,947Investing ActivitiesNet decrease (increase) in money market investments
    
    
    112,534
    
    
    
    (146,441
    )
    
    
    6,588Sales (purchases) of investment securities
    
    
    767
    
    
    
    (6,045
    )
    
    
    Investments in and advances to subsidiaries
    
    
    
    
    
    
    
    
    
    
    1,546Net cash provided (used) by investing activities
    
    
    113,301
    
    
    
    (152,486
    )
    
    
    8,134Financing ActivitiesNet decrease in short-term borrowings
    
    
    
    
    
    
    (50,000
    )
    
    
    (51,790
    )Proceeds from issuance of long-term borrowings
    
    
    
    
    
    
    
    
    
    
    50,000Capital contribution to subsidiary bank
    
    
    (74,000
    )
    
    
    (250,000
    )
    
    
    Net proceeds from issuance of preferred convertible stock
    
    
    
    
    
    
    114,161
    
    
    
    Proceeds from issuance of preferred redeemable stock and warrant
    
    
    
    
    
    
    300,000
    
    
    
    Net proceeds from issuance of common stock
    
    
    
    
    
    
    74,844
    
    
    
    Cash dividends paid on common stock
    
    
    
    
    
    
    (21,959
    )
    
    
    (87,798
    )Cash dividends paid on preferred stock
    
    
    (13,875
    )
    
    
    
    
    
    
    Proceeds from stock options exercised and restricted stock activity
    
    
    
    
    
    
    66
    
    
    
    4,833Shares acquired for retirement and purchased for taxes
    
    
    (70
    )
    
    
    (444
    )
    
    
    (13,514
    )Net cash (used) provided by financing activities
    
    
    (87,945
    )
    
    
    166,668
    
    
    
    (98,269
    )Net (decrease) increase in cash and due from banks
    
    
    (4,797
    )
    
    
    7,754
    
    
    
    (188
    )Cash and due from banks at beginning of year
    
    
    7,754
    
    
    
    
    
    
    
    188Cash and due from banks at end of year
    
    $
    2,957
    
    
    $
    7,754
    
    
    $
    
 113




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##### Table of Contents



Note 20. Subsequent Events
   F&M
Bank  Iowa Balance Sheet  (in thousands)
 
 December 31,Assets
    
    2009Cash and due from banks
    
    $
    22,657Money market investments
    
    
    129,878Investment securities
    
    
    171,115FHLB and Federal Reserve stock
    
    
    1,194Net portfolio loans
    
    
    132,544Loans held for sale
    
    
    241Other assets
    
    
    10,318Total assets
    
    $
    467,947
 December 31,Liabilities and Shareholders' Equity
    
    2009Deposits
    
    $
    408,577Short-term borrowings
    
    
    11,263Long-term debt
    
    
    500Other liabilities
    
    
    2,572Total liabilities
    
    
    422,912Shareholders equity
    
    
    45,035Total liabilities and shareholders equity
    
    $
    467,947
   114




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 To the Board of Directors and the Shareholders of Citizens Republic Bancorp, Inc.
     
 
 115




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##### Table of Contents



SELECTED QUARTERLY INFORMATION (unaudited)
 .
 Selected Quarterly Information
 2009

    
    2008(in thousands, except per share amounts)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstInterest income
    
    $
    135,812
    
    
    $
    141,046
    
    
    $
    142,132
    
    

    $
    149,689
    
    
    $
    167,677
    
    
    $
    171,723
    
    
    $
    174,394
    
    
    $
    187,117Interest expense
    
    
    51,876
    
    
    
    60,161
    
    
    
    66,531
    
    
    
    72,743
    
    
    
    81,990
    
    
    
    84,405
    
    
    
    86,779
    
    
    
    98,805Net interest income
    
    
    83,936
    
    
    
    80,885
    
    
    
    75,601
    
    
    
    76,946
    
    
    
    85,687
    
    
    
    87,318
    
    
    
    87,615
    
    
    
    88,312Provision for loan losses
    
    
    84,193
    
    
    
    77,783
    
    
    
    99,962
    
    
    
    64,017
    
    
    
    118,565
    
    
    
    58,390
    
    
    
    74,480
    
    
    
    30,619Noninterest income (1)
    
    
    15,380
    
    
    
    11,842
    
    
    
    20,966
    
    
    
    19,233
    
    
    
    15,754
    
    
    
    28,005
    
    
    
    27,058
    
    
    
    30,925Noninterest expense (2)
    
    
    83,196
    
    
    
    83,614
    
    
    
    355,433
    
    
    
    80,778
    
    
    
    78,611
    
    
    
    74,301
    
    
    
    261,228
    
    
    
    76,562Net (loss) income (3)
    
    
    (64,728
    )
    
    
    (56,923
    )
    
    
    (347,413
    )
    
    
    (45,149
    )
    
    
    (195,369
    )
    
    
    (7,176
    )
    
    
    (201,634
    )
    
    
    11,127Deemed dividend on convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,737
    )
    
    
    
    
    
    
    Dividend on redeemable preferred stock
    
    
    (5,254
    )
    
    
    (5,224
    )
    
    
    (5,196
    )
    
    
    (4,103
    )
    
    
    (227
    )
    
    
    
    
    
    
    
    
    
    
    Net (loss) income attributable to common shareholders
    
    
    (69,982
    )
    
    
    (62,147
    )
    
    
    (352,609
    )
    
    
    (49,252
    )
    
    
    (195,596
    )
    
    
    (18,913
    )
    
    
    (201,634
    )
    
    
    11,127Shares outstanding (end of period)
    
    
    394,397
    
    
    
    394,470
    
    
    
    126,258
    
    
    
    126,299
    
    
    
    125,997
    
    
    
    126,017
    
    
    
    95,899
    
    
    
    75,748Per Common Share DataNet (loss) income:Basic
    
    $
    (0.18
    )
    
    $
    (0.48
    )
    
    $
    (2.81
    )
    
    $
    (0.39
    )
    
    $
    (1.56
    )
    
    $
    (0.20
    )
    
    $
    (2.53
    )
    
    $
    0.15Diluted
    
    
    (0.18
    )
    
    
    (0.48
    )
    
    
    (2.81
    )
    
    
    (0.39
    )
    
    
    (1.56
    )
    
    
    (0.20
    )
    
    
    (2.53
    )
    
    
    0.15
 
 (1)
    
    Noninterest income includes a net loss on debt extinguishment of $15.9 million in the third quarter of 2009, and $8.7 million, $0.9 million, $4.4 million and $6.2
million in fair-value adjustments on loans held for sale in the fourth, third, second and first quarters of 2009, respectively. Fair-value adjustments on
loans held for
sale of $5.9 million, $1.3 million and $2.2 million were included in noninterest income in the fourth, third and second quarters of 2008, respectively.(2)
    
    Noninterest expense includes a goodwill impairment charge of $266.5 million and $178.1 million in the second quarters of 2009 and 2008, respectively, and $8.2
million, $3.9 million, $3.3 million and $8.0 million in fair-value adjustments on ORE properties in the fourth, third, second and first quarters of 2009. Fair-value adjustments on ORE properties for 2008 were $5.9 million,
$1.3 million and $2.2 million in the fourth, third and second quarters, respectively.(3)
    
    Net income (loss) includes a deferred tax valuation allowance of $79.8 million and $136.6 million in the fourth quarters of 2009 and 2008, respectively. 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   116




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Report on Managements Assessment of Internal Control over Financial Reporting
  
    
    Pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Corporation;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. generally accepted accounting
principles, and that receipts and expenditures of the Corporation are being made only in
accordance with authorizations of management and the directors of the Corporation; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Corporations assets that could have a material effect
on the financial statements.
    /s/ Charles D. Christy
    
    /s/ Cathleen H. NashCharles D. Christy 

Executive Vice President and Chief Financial Officer
    
    Cathleen H. Nash 

President and Chief Executive Officer
 Changes in Internal Control over Financial Reporting
  117




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 To the Board of Directors and the Shareholders of Citizens Republic Bancorp, Inc.
       
 
 118




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 Part III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  Equity Compensation Plan Information
   119




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##### Table of Contents



Number of sharesremaining available forfuture issuance underNumber of shares to be issued
    
    
    Weighted-average
    
    
    equity compensationupon exercise of outstanding
    
    
    exercise price of
    
    
    plans (excluding sharesPlan Category
    
    options
    
    
    outstanding options
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
shareholders
    
    
    3,013,248(1)
    
    
    $
    26.38
    
    
    
    1,349,763(2)Equity compensation
plans not approved
by shareholders
    
    
    53,500(3)
    
    
    
    16.66
    
    
    
    Total
    
    
    3,066,748
    
    
    $
    26.21
    
    
    
    1,349,763
 
 (1)
    
    Options for 266,296 Citizens common shares with a weighted-average exercise price of $14.64
per share were outstanding under the assumed Republic plans as of December 31, 2009 and are included in the
table.(2)
    
    Includes 591,441 shares that may be granted under the Stock Plan in the form of restricted stock,
restricted stock units or performance shares. Does not include shares that would be available for future grants
if the proposed amendment and restatement of the Stock Plan is approved by shareholders.(3)
    
    Issued under the All-Employee Plan. Under this plan, on May 18, 2000, Citizens granted stock
options to all employees who did not receive grants under the then existing but since expired Third Amended
Stock Option Plan. Each full-time employee received options for 200 shares of common stock and each part-time
employee received options for 100 shares. The $16.66 exercise price of the grant was the market price of the
common stock on the grant date. The options became exercisable three years after the date of grant. The
options expire ten years from the date of grant. Options for a total of 550,700 shares were granted of which
options for 53,500 shares were outstanding as of December 31, 2009. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  120




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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    1.   Financial Statements:
 The following Consolidated Financial Statements of Citizens and Report of Independent
Registered Public Accounting Firm on Consolidated Financial Statements are incorporated by
reference under Item 8 Financial Statements and Supplementary Data of this document:
 
 2.
    
    Financial Statement Schedules:

All schedules are omitted  see Item 15(c) below.3.
    
    Exhibits:

The exhibits listed on the Exhibit Index of this report are filed herewith and are
incorporated herein by reference.
 (b)
    
    Exhibits:
 The exhibits listed on the Exhibit Index of this report are filed herewith and are
incorporated herein by reference. At the request of any shareholder, the Corporation will
furnish any exhibit upon the payment of a fee of $0.10 per page to cover the costs of
furnishing the exhibit.
 (c)
    
    Financial Statement Schedules
 All financial statement schedules normally required by regulation S-X are omitted since they
are either not applicable or the required information is shown in the Consolidated Financial
Statements or Notes thereto.
 121




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SIGNATURES
  
 by
    /s/ Cathleen H. Nash
    
    Date: March 1, 2010Cathleen H. NashPresident and Chief Executive Officer
  Signature
    
    Capacity
    
    Date/s/ Charles D. Christy
    
    Executive Vice President and
    
    March 1, 2010Charles D. Christy
    
    Chief Financial Officer/s/ Cathleen H. Nash
    
    President and Chief Executive Officer
    
    March 1, 2010Cathleen H. Nash/s/ Joseph C. Czopek
    
    Controller and
    
    March 1, 2010Joseph C. Czopek
    
    Principal Accounting Officer/s/ Lizabeth A. Ardisana
    
    Director
    
    March 1, 2010Lizabeth A. Ardisana/s/ George J. Butvilas
    
    Director
    
    March 1, 2010George J. Butvilas/s/ Robert S. Cubbin
    
    Director
    
    March 1, 2010Robert S. Cubbin/s/ Richard J. Dolinski
    
    Director
    
    March 1, 2010Richard J. Dolinski/s/ Gary J. Hurand
    
    Director
    
    March 1, 2010Gary J. Hurand/s/ Dennis J. Ibold
    
    Director
    
    March 1, 2010Dennis J. Ibold
 122




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##### Table of Contents



SIGNATURES (continued)
 /s/ Benjamin W. Laird
    
    Director
    
    March 1, 2010Benjamin W. Laird/s/ Stephen J. Lazaroff
    
    Director
    
    March 1, 2010Stephen J. Lazaroff/s/ Kendall B. Williams
    
    Director
    
    March 1, 2010Kendall B. Williams/s/ James L. Wolohan
    
    Chairman of the Board
    
    March 1, 2010James L. Wolohan/s/ Steven E. Zack
    
    Director
    
    March 1, 2010Steven E. Zack
 123




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.
    
    Exhibit2.2
    
    
    Agreement and Plan of Merger, dated as of June 26, 2006, by and between
Republic Bancorp, Inc. and Citizens Republic Bancorp, Inc. (Citizens Form
8-K filed June 30, 2006).2.3
    
    
    Stock Purchase Agreement, dated as of January 29, 2010, by and between
Citizens Republic Bancorp, Inc. and Great Western Bank (Citizens Form 8-K
filed February 2, 2010).3.1
    
    
    Amended and Restated Articles of Incorporation of Citizens Republic
Bancorp, Inc., as amended as of September 17, 2009 (Citizens 2009 Third
Quarter Report on Form 10-Q).3.2
    
    
    Bylaws of Citizens Republic Bancorp, Inc., amended and restated as of
September 24, 2009 (Citizens 2009 Third Quarter Report on Form 10-Q).4.2
    
    
    Indenture, dated as of January 27, 2003 among Citizens Republic Bancorp,
Inc. and JP Morgan Chase Bank, as Trustee (Citizens registration statement
on Form S-4, registration no. 333-104472).4.3
    
    
    Registration Rights Agreement, dated as of January 27, 2003 among
Citizens Republic Bancorp, Inc. and Morgan Stanley, Keefe, Bruyette & Woods,
Inc., Robert W. Baird & Co., Credit Suisse First Boston, Fahnestock & Co.
Inc., Howe Barnes Investments, Inc. and McDonald Investments, as Initial
Purchasers (Citizens registration statement on Form S-4, registration no.
333-104472).4.4
    
    
    Floating Rate Junior Subordinated Deferrable Interest Debentures dated as
of June 26, 2003 (Citizens 2003 Second Quarter Report on Form 10-Q).4.5
    
    
    Form of Indenture between Republic Bancorp Inc. (Republic) and
Wilmington Trust Company for Republics 8.60% Subordinated Debentures due
2031 (Republics registration statement on Form S-3, registration no.
333-70062).4.6
    
    
    Form of Republics 8.60% Subordinated Debenture due 2031 (Republics
registration statement on Form S-3, registration no. 333-70062).4.7
    
    
    Certificate of Trust of Republic Capital Trust I, a subsidiary of
Republic (Republics registration statement on Form S-3, registration no.
333-70062).4.8
    
    
    Trust Agreement of Republic Capital Trust I, a subsidiary of Republic
(Republics registration statement on Form S-3, registration no. 333-70062).4.9
    
    
    Form of Amended and Restated Trust Agreement of Republic Capital Trust I,
a subsidiary of Republic (Republics registration statement on Form S-3,
registration no. 333-70062).4.10
    
    
    Form of Trust Preferred Securities Certificate of Republic Capital Trust
I, a subsidiary of Republic (Republics registration statement on Form S-3,
registration no. 333-70062).
 124




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EXHIBIT
INDEX (continued)
 ExhibitNo.
    
    Exhibit4.11
    
    
    Form of Agreement as to Expenses and Liabilities between Republic and
Republic Capital Trust I, a subsidiary of Republic (Republics registration
statement on Form S-3, registration no. 333-70062).4.12
    
    
    Form of Trust Preferred Securities Guarantee Agreement between Republic
and Wilmington Trust Company (Republics registration statement on Form S-3,
registration no. 333-70062).4.13
    
    
    Indenture, dated October 3, 2006, between Citizens Republic Bancorp,
Inc. and U.S. Bank National Association, as Trustee (Citizens Current Report
on Form 8-K filed October 3, 2006).4.14
    
    
    First Supplemental Indenture, dated October 3, 2006, between Citizens
Republic Bancorp, Inc. and U.S. Bank National Association as Trustee
(Citizens Current Report on Form 8-K filed on October 3, 2006).4.15
    
    
    Amended and Restated Trust Agreement, dated October 3, 2006, among
Citizens Republic Bancorp, Inc., U.S. Bank National Association, as Property
Trustee, U.S. Bank Trust National Association as Delaware Trustee, and
Administrative Trustees named therein (Citizens Current Report on Form 8-K
filed October 3, 2006).4.16
    
    
    Guarantee Agreement, dated October 3, 2006, between Citizens Republic
Bancorp, Inc. as Guarantor and U.S. Bank National Association as Guarantee
Trustee (Citizens Current Report on Form 8-K filed October 3, 2006).4.18
    
    
    Certificate representing the Series A Preferred Stock (Citizens Current
Report on Form 8-K filed June 11, 2008).4.19
    
    
    Warrant to Purchase up to 17,578,125 shares of common stock, dated
December 12, 2008 (Citizens Current Report on Form 8-K filed December 15,
2008).10.2*
    
    
    Citizens Republic Bancorp, Inc. Third Amended Stock Option Plan
(Citizens 1997 Second Quarter Report on Form 10-Q).10.3*
    
    
    First Amendment to Citizens Republic Bancorp, Inc. Third Amended Stock
Option Plan (Citizens 2000 Second Quarter Report on Form 10-Q).10.4*
    
    
    Citizens Republic Bancorp, Inc. All-Employee Stock Option Plan (Citizens
registration statement on Form S-8, registration no. 333-40100).10.5*
    
    
    Citizens Republic Bancorp, Inc. Stock Option Plan for Directors
(Citizens registration statement on Form S-8, registration no. 33-61197).10.6*
    
    
    First Amendment to Citizens Republic Bancorp, Inc. Stock Option Plan for
Directors (Citizens 2000 Second Quarter Report on Form 10-Q).10.7*
    
    
    Citizens Republic Bancorp, Inc. Stock Compensation Plan (Citizens 2001
Annual Report on Form 10-K).
 125




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EXHIBIT INDEX (continued)
 ExhibitNo.
    
    Exhibit10.8*
    
    
    Post Effective Amendment No. 1 to Form S-4 on Form S-8 pertaining to F&M
Bancorporation, Inc. 1993 Incentive Stock Option Plan and F&M Bancorporation,
Inc. 1993 Stock Option Plan for Non-employee Directors (Citizens registration
statement on Form S-8, registration statement no. 333-86569).10.9*
    
    
    Citizens Republic Bancorp, Inc. Amended and Restated Section 401(k) Plan
(Citizens registration statement on Form S-8, registration no. 333-09455).10.13
    
    
    Amended and Restated Declaration of Trust dated as of June 26, 2003 by
and among U.S. Bank National Association, as institutional Trustee, Citizens
Republic Bancorp, Inc., as Sponsor, and William R. Hartman, Charles D. Christy
and Thomas W. Gallagher as Administrators (Citizens 2003 Second Quarter Report
on Form 10-Q).10.14
    
    
    Placement Agreement, dated June 16, 2003, between Citizens, Citizens
Michigan Statutory Trust I, FTN Financial Capital Markets and Keefe Bruyette &
Woods, Inc. (Citizens 2003 Second Quarter Report on Form 10-Q).10.15
    
    
    Guarantee Agreement dated as of June 26, 2003 by and between Citizens
Republic Bancorp, Inc. and U.S. Bank National Association (Citizens 2003
Second Quarter Report on Form 10-Q).10.19*
    
    
    Employment Agreement, dated as of June 26, 2006, by and between Citizens
Republic Bancorp, Inc. and William R. Hartman (Citizens Current Report on Form
8-K filed June 30, 2006).10.20*
    
    
    Form of Nonqualified Stock Option Agreement for Non-employee Directors
under the Citizens Republic Bancorp, Inc. Stock Compensation Plan (Citizens
2004 Third Quarter Report on Form 10-Q).10.21*
    
    
    Form of Nonqualified Stock Option Agreement for Employees under the
Citizens Republic Bancorp, Inc. Stock Compensation Plan (Citizens 2004 Third
Quarter Report on Form 10-Q).10.22*
    
    
    Form of Restricted Stock Agreement under the Citizens Republic Bancorp,
Inc. Stock Compensation Plan (Citizens 2004 Third Quarter Report on Form
10-Q).10.24*
    
    
    Form of Restricted Stock Agreement (Employee Version) (Citizens Current
Report on Form 8-K filed on June 7, 2005).10.25*
    
    
    Form of Restricted Stock Agreement (Director Version) (Citizens Current
Report on Form 8-K filed on June 7, 2005).10.26*
    
    
    Form of Stock Option Agreement (Employee Version) (Citizens Current
Report on Form 8-K filed on June 7, 2005).10.27*
    
    
    Form of Stock Option Agreement (Director Version) (Citizens Current
Report on Form 8-K filed on June 7, 2005).10.28*
    
    
    Form of Restricted Stock Agreement (Employee Version) (Citizens 2006
Second Quarter Report on Form 10-Q).
 126




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EXHIBIT INDEX (continued)
 ExhibitNo.
    
    Exhibit10.29*
    
    Form of Restricted Stock Agreement (Director Version) (Citizens 2006 Second Quarter Report on Form 10-Q).10.31*
    
    Retention Agreement with each of John D. Schwab, Clinton A. Sampson, and Randall J. Peterson, dated
August 16, 2006 (Citizens 2006 Third Quarter Report on Form 10-Q).10.37*
    
    Form of Restricted Stock Agreement (Employee Version as of May 2007) (Citizens 2007 Second Quarter
Report on Form 10-Q).10.38*
    
    Form of Restricted Stock Agreement (Non-Employee Director Version as of May 2007) (Citizens 2007 Second
Quarter Report on Form 10-Q).10.41*
    
    Form of Amended and Restated Change in Control Agreement between Citizens Republic Bancorp, Inc. and each
of William R. Hartman, Charles D. Christy, Roy A. Eon, Thomas W. Gallagher, Martin E. Grunst, Cathleen H. Nash,
Clinton A. Sampson, and John D. Schwab, dated February 26, 2008 (Citizens Annual Report on Form 10-K for the
year ended December 31, 2007).10.42*
    
    Amended and Restated Change in Control Agreement between Citizens Republic Bancorp, Inc. and Randall J.
Peterson, dated February 26, 2008 (Citizens Annual Report on Form 10-K for the year ended December 31, 2007).10.43*
    
    Supplemental Retirement Benefits Plan For William R. Hartman, dated September 19, 2007 (Citizens Annual
Report on Form 10-K for the year ended December 31, 2007).10.44*
    
    Agreement between Citizens Republic Bancorp, Inc., and Clinton A. Sampson, dated November 4, 2008
(Citizens 2008 Third Quarter Report on Form 10-Q).10.45*
    
    2008 Management Incentive Plan (Citizens Current Report on Form 8-K filed September 17,
2008).110.46*
    
    Letter Agreement between Citizens Republic Bancorp, Inc. and the U.S. Department of the Treasury, dated
December 12, 2008 (Citizens Current Report on Form 8-K filed December 15, 2008).10.47*
    
    Form of Waiver Executed by William R. Hartman, Charles D. Christy, Cathleen H. Nash, John D. Schwab, and
Clinton A. Sampson, dated December 12, 2008 (Citizens Current Report on Form 8-K filed December 15, 2008).10.48*
    
    Form of Consent Executed by William R. Hartman, Charles D. Christy, Cathleen H. Nash, John D. Schwab, and
Clinton A. Sampson, dated December 12, 2008 (Citizens Current Report on Form 8-K filed December 15, 2008).10.49*
    
    Amendment to Stock Compensation Plan as of December 10, 2008 (Citizens 2008 Form 10-K).10.50*
    
    Letter Agreement dated January 22, 2009, between Citizens Republic Bancorp, Inc. and Cathleen H. Nash
(Citizens Current Report on Form 8-K filed on January 23, 2009).10.51*
    
    Agreement between Citizens Republic Bancorp, Inc., and William R. Hartman, dated January 22, 2009
(Citizens Current Report on Form 8-K filed on January 23, 2009).10.52*
    
    Form of Long Term Incentive Award Agreement, dated January 29, 2009 (Citizens 2009 First Quarter Report
on Form 10-Q).
 127




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EXHIBIT INDEX (continued)
 ExhibitNo.
    
    Exhibit10.53*
    
    
    Amendment to the Citizens Banking Corporation Stock Compensation Plan,
dated February 21, 2007 (Citizens 2009 First Quarter Report on Form 10-Q).10.54*
    
    
    Form of Indemnification Agreement with Directors, dated as of September
24, 2009, between Citizens Republic Bancorp, Inc. and each of Lizabeth A.
Ardisana, George J. Butvilas, Robert S. Cubbin, Richard J. Dolinski, Gary J.
Hurand, Dennis J. Ibold, Benjamin W. Laird, Stephen J. Lazaroff, Cathleen H.
Nash, Kendall B. Williams, James L. Wolohan, and Steven E. Zack (Citizens 2009
Third Quarter Report on Form 10-Q).10.55*
    
    
    Amended and Restated Deferred Compensation Plan for Directors.10.56*
    
    
    Amended and Restated Deferred Compensation Plan for Executives.12.1
    
    
    Statement of ratio of earnings to fixed charges21
    
    
    Subsidiaries of the Registrant23
    
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934.31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934.99.1
    
    
    Certification of Chief Executive Officer pursuant to Section 111(b)(4) of
the Emergency Economic Stabilization Act of 2008.99.2
    
    
    Certification of Chief Financial Officer pursuant to Section 111(b)(4) of
the Emergency Economic Stabilization Act of 2008.
 
 *
    
    Current management contracts or compensatory plans or arrangements.1
    
    Portions of this exhibit have been omitted pursuant to Citizens request to the
Secretary of the Securities and Exchange Commission for confidential treatment pursuant to rule
24b-2 under the Securities Exchange Act of 1934, as amended. 128




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129