EX-99.1 3 k81357exv99w1.txt PRESS RELEASE, DATED OCTOBER 16, 2003 [CITIZENS BANKING CORPORTION LETTERHEAD] [CITIZENS LOGO] FOR IMMEDIATE RELEASE October 16, 2003 CITIZENS BANKING CORPORATION 2003 THIRD QUARTER RESULTS AND DIVIDEND ANNOUNCEMENT FLINT, MICHIGAN --- Citizens Banking Corporation announced net income of $19,605,000 or $0.45 per diluted share for the three months ended September 30, 2003, compared to a net loss of $45,929,000 or $1.03 per diluted share in the same quarter of 2002 and net income of $13,214,000 or $0.30 per share in the second quarter of 2003. Returns on average assets and average equity during the third quarter were 1.00% and 12.55%, respectively, compared with negative returns of (2.39)% and (25.63)% in the third quarter of 2002. For the nine months ended September 30, 2003, net income was $47,877,000 or $1.10 per diluted share, compared to $3,513,000 or $0.08 per diluted share for the same period of 2002. The improvement in net income in the third quarter of 2003 compared to the second quarter of 2003 and the third quarter of 2002 resulted primarily from a lower loan loss provision. The prior year third quarter results were also negatively impacted by a special charge of $13.8 million ($9.0 million after-tax) to restructure Citizens' consumer, business and wealth management lines of business and other charges of $9.4 million ($6.1 million after-tax) for various items Citizens considered unusual in nature. Net interest income was charged $0.7 million, noninterest income was charged $1.6 million and noninterest expense was charged $7.1 million. The provision for losses declined to $10.3 million in the third quarter of 2003 compared to $25.7 million in the second quarter and $89.3 million in the third quarter of 2002. The lower loan loss provision resulted from a decline in nonperforming assets, lower net charge-offs and fewer risk rating downgrades within the commercial loan portfolio. "We're pleased that the projected and continued improvement in our credit quality has enabled us to increase earnings this quarter," stated William R. Hartman, chairman, president and CEO. "We have placed a great focus on further improving our risk profile while completing the many ongoing initiatives that will drive future revenue growth." The collateral field audits which were initiated in late March are essentially complete, with the remainder to be completed by the end of October 2003. Based upon results of these audits, there have been no additional reserves or charge-offs although a small number of commercial customers have been requested to seek alternative financing because they were unwilling or unable to accommodate Citizens' reporting requests. "We are continuing our strategy of performing an ongoing conservative risk evaluation of the portfolio in order to maintain reserves commensurate with the continued sluggish economy in the markets which we serve," remarked John D. Schwab, EVP and chief credit officer. KEY HIGHLIGHTS OF THE QUARTER: - As previously anticipated, the provision for loan losses and net charge-offs were down in the third quarter. Provision for loan losses declined by 60% to $10.3 million and net charge-offs were down by 14% to $10.3 million for the third quarter compared to the second quarter 2003. Nonperforming assets were down $5.4 million or 5.5% from second quarter 2003 levels. - Citizens' Board of Directors approved a new stock repurchase plan today that provides for the repurchase of up to 3,000,000 shares of Citizens Banking Corporation common stock on the open market. At present, there are 43,227,348 shares issued and outstanding. - A three week Home Equity campaign during the third quarter produced favorable results with minimal advertising expense. Over $54 million in new commitments were booked resulting in $26 million of new balances. - Citizens' executive management team is now complete as a result of the hiring of a commercial banking head for Michigan, a new head of Citizens' mortgage company (both announced today), a commercial products head for the Corporation, a head of wealth management, and several other key additions. - Citizens Bank Wealth Management, N.A., through an arrangement with EPIC Advisors, Inc., announced plans to increase and grow its retirement plan business by offering its clients advanced state-of-the-art online employee account access, online retirement plan design and consulting options, and access to industry experts. - Citizens formed an agricultural lending group and appointed a senior credit officer and others to the group with broad experience in agricultural lending. This initiative is intended to grow our agricultural business and deliver superior service to clients while providing more consistent underwriting, risk rating and adherence to structure for loans made to customers in this unique industry. BALANCE SHEET Citizens' total assets at September 30, 2003 were $7.784 billion, a decrease of $2.0 million compared with June 30, 2003 and an increase of $262 million or 3.5% compared with December 31, 2002. Loans declined $61 million or 1.2% from June 30, 2003 and $206 million or 3.8% compared with December 31, 2002. The decline in loans from year end 2002 reflected a decrease in commercial and mortgage portfolio loans, partially offset by an increase in consumer loans. Investment security balances increased $537.8 million or 36.9% from year end 2002 as Citizens began to expand its investment securities portfolio near the end of the first quarter of 2003 to offset the effects of weak loan demand and the prospect of net interest margin pressure from continued low interest rates. Increases in short-term borrowings and FHLB advances have funded the expansion of the investment portfolio. Commercial loans decreased $264 million or 8.0% at September 30, 2003 compared with December 31, 2002 resulting from increased activity in fixed-rate loan refinancing and paydowns, lower demand for commercial credit and earlier identification and reduction of exposure on credits with the potential to deteriorate. This decline in loan demand occurred primarily in Citizens' Michigan and Wisconsin markets. Mortgage loans declined $134 million or 21.5% at September 30, 2003 from year-end 2002 resulting from high refinancing activity causing prepayment of existing portfolio loans and the continued sale of most new mortgage loan production into the secondary market. Consumer loans increased $192 million or 12.7% at September 30, 2003 compared to December 31, 2002 due to the success of the spring and summer home equity campaigns. Home equity loans increased 23.1% from year end 2002 and comprised $127 million of the $192 million increase in consumer loans. An $87 million increase in indirect consumer loans at September 30, 2003 compared with year end 2002 was due primarily to increased market share with the existing dealer base. Other consumer loans were down $22 million or 7.3% at September 30, 2003 from year end 2002. Total deposits decreased $455 million or 7.7% to $5.482 billion at September 30, 2003 compared with $5.937 billion at December 31, 2002. The decline in deposits occurred largely within time deposits, and to a lesser extent, savings deposits as clients sought higher yielding investment alternatives in the low interest rate environment. In the third quarter of 2003, Citizens completed a successful marketing campaign promoting its "Perfect Fit" checking account products to increase growth in core interest bearing and non-interest bearing checking accounts. During the 12 week "Perfect Fit" campaign, over 10,600 new accounts were opened representing nearly $61 million in new deposit balances. "Our consumer banking sales campaigns are certainly generating results. During the quarter we concentrated our sales efforts on a Home Equity Loan campaign, introduced branch merchandising focused on consumer loan products, and completed our `Perfect Fit' checking campaign. All three programs yielded successful results in new business and fee income," commented Wayne G. Schaeffer, EVP and head of consumer banking. NET INTEREST MARGIN AND NET INTEREST INCOME Net interest margin declined to 4.03% in the third quarter of 2003 compared to 4.17% in the second quarter of 2003 and 4.40% in the third quarter of 2002. The decrease in net interest margin in the third quarter of 2003 compared to the second quarter is the result of high levels of investment security and fixed rate commercial loan prepayments being reinvested at lower yields, and accelerated purchase premium amortization on mortgage related securities. The very low levels of longer-term rates during June and July fueled above normal prepayment volume versus the prior quarter. The 25 basis point decrease in the Federal Funds Rate on June 25, 2003 had no significant impact on net interest margin. For the nine months ended September 30, 2003 net interest margin declined to 4.15% from 4.43% compared to the same period of the prior year. This decline is attributable to the asset sensitive position held prior to the second quarter of 2003, accelerated prepayments in both the fixed rate commercial loan portfolio and the mortgage related securities portfolio, plus a mix shift in earning assets from loans to lower yielding securities. Fourth quarter 2003 net interest margin is expected to show additional compression due to the reinvestment of fixed rate asset prepayments at current market rates. Net interest income decreased $1.8 million in the third quarter of 2003 compared to the second quarter of 2003, due to the lower net interest margin. Average earning assets increased $24.1 million in the third quarter compared with the previous quarter as growth in the investment portfolio and money market investments of $42.9 million more than offset a decline in loan balances. Compared to the third quarter of 2002, net interest income declined $4.0 million in the current quarter due to a decrease in the net interest margin partially offset by an increase of $221.6 million in earning assets. For the first nine months of 2003, net interest income declined $10.0 million from the same period a year ago due to a 28 basis point decline in net interest margin partially offset by an increase of $100.9 million in earning assets. NONINTEREST INCOME Noninterest income for the third quarter of 2003 was $25.1 million, up $0.2 million or 0.8% from the second quarter of 2003 and $5.3 million or 27.0% from the third quarter of 2002. The increase from the second quarter of 2003 reflected higher service charges on deposits and brokerage and investment fees partially offset by losses from the sale of equipment. Compared to the third quarter of 2002, the increase was due to higher service charges on deposit accounts and mortgage banking revenue. Also contributing to the increase was a charge of $1.6 million recorded in the third quarter of 2002, which included market valuation adjustments of $662,000 to an equity investment and $650,000 to life insurance cash surrender values, and write-offs of $200,000 for obsolete assets and $75,000 for cash management fees accrued but not collectible. Noninterest income for the nine months ended September 30, 2003 was $73.2 million, down $1.9 million or 2.5% from $75.1 million in the first nine months of 2002. The decline was largely due to gains recorded in 2002 of $5.4 million from the sale of Citizens' merchant services business and $2.4 million from the sale of securitized mortgages partially offset by the aforementioned one-time charge of $1.6 million. The other components of noninterest income increased $4.4 million period over period as higher service charges on deposits, mortgage banking revenue and income from bank owned life insurance more than offset lower trust, brokerage and investment fees and bankcard fees. Service charges on deposit accounts increased $1.1 million and $2.1 million for the three and nine month periods ended September 30, 2003 compared to the same periods in 2002. These increases reflect higher overdraft revenue due to the implementation of additional fees, a new overdraft monitoring system and fewer waived fees. Bankcard fees declined $3.0 million or 56.9% for the nine month period ended September 30, 2003 and were $0.1 million or 13.2% higher than the comparable quarter of 2002. The decline for the first nine months of 2003, compared to the same period in 2002, was a result of the sale of the merchant services business in the second quarter of 2002. Trust fees for the quarter were unchanged compared to the third quarter of 2002 and were down $1.3 million or 9.5% for the nine months ended 2003 compared to the same period in 2002. These fees are based primarily on the market value of assets under administration. For the nine months ended September 30, 2003, the decline in trust fees was due to lower financial markets and to a lessor extent attrition. Trust fee revenue, however, grew by $44,000 or 1.0% in the third quarter of 2003 compared to the second quarter of 2003 primarily due to the recent improvement in the financial markets. Total trust assets under administration were $2.61 billion at September 30, 2003, an increase of $123.0 million from September 30, 2002, and a decline of $13.0 million from June 30, 2003. Brokerage and investment fees were unchanged for the quarter and declined $1.0 million or 14.3% during the nine months ended September 30, 2003 compared to the same periods of 2002. The decline for the first nine months of 2003 reflects slower retail sales of fixed annuity products. Brokerage and investment fees were up $0.4 million in the third quarter of 2003 from the previous quarter due to a recent campaign promoting the sale of such products. Mortgage and other loan income increased $2.5 million or 84.6% in the third quarter of 2003 and $6.1 million or 62.5% in the nine months ended September 30, 2003 compared to the same periods of 2002 as a result of higher mortgage loan origination volume during 2003. The majority of all new mortgage loan origination along with the related servicing was sold in the secondary market resulting in higher revenue. Other noninterest income increased $1.7 million for the quarter and $3.0 million for the nine months ended September 30, 2003, compared to the same periods of 2002. The increase in both periods was principally due to the aforementioned charge of $1.6 million recorded in the third quarter of 2002 and increases in life insurance income and title insurance fees. Higher life insurance income reflects the purchase of $78.0 million of separate account bank owned life insurance in the third quarter of 2002. Title insurance fees increased due to higher mortgage origination volume. Based on the current economic and interest rate environment, noninterest income is expected to decline somewhat in the fourth quarter of 2003 from third quarter levels due to lower mortgage income as mortgage origination and sale volume is expected to decline in the fourth quarter. NONINTEREST EXPENSE Noninterest expense for the third quarter was $59.6 million compared with $79.5 million for the third quarter of 2002 and $56.4 million for the second quarter of 2003, a decrease of $19.9 million or 25.0% from the third quarter of 2002 but up $3.2 million or 5.7% from second quarter 2003. For the nine months ended September 30, 2003, total noninterest expense decreased $29.7 million or 14.7% to $172.5 million compared to the same period in 2002. The decline in both the three and nine month periods reflect a special charge of $13.8 million and other charges of $7.1 million recorded in the third quarter of 2002 for restructuring and other initiatives as well as decreases in most other major components of noninterest expense offset, in part, by increased professional services, system implementation costs and other expense. Noninterest expense in the current quarter was up over the second quarter of 2003 primarily due to higher professional services expense, advertising and public relations costs, other real estate expenses and system implementation costs. Salaries and employee benefits decreased $1.2 million or 3.7% for the quarter and $3.7 million or 3.9% for the nine months ended September 30, 2003 compared to the same periods of 2002. Salary and benefit costs were down due to lower staffing levels resulting from the restructuring initiatives announced during the third quarter of 2002 and normal attrition. Higher incentive-based compensation associated with mortgage loan origination and sales activity and increased medical costs partially offset the decline. Citizens had 2,353 full time equivalent employees at September 30, 2003, down from 2,650 at September 30, 2002. Equipment expenses decreased $1.1 million or 21.4% for the quarter, and $2.9 million or 19.2% for the nine month period ended September 30, 2003, compared to the same periods of 2002. The decrease resulted from lower depreciation and improved pricing from new or renegotiated maintenance contracts. A $0.4 million charge in the third quarter of 2002 for additional depreciation on equipment to be retired early also contributed to the decrease. Professional services expense increased $1.4 million or 40.4% for the quarter and $2.9 million or 29.9% for the nine months ended September 30, 2003, compared to the same periods of 2002. The increases reflect $0.6 million incurred for the collateral field audit initiative begun in March of 2003, higher legal costs related to loan collection efforts, increased executive recruiting and relocation costs, implementation costs for Citizens' new INEA Performance Management software and additional costs associated with engagement of banking industry consultants who assisted in the restructuring. Advertising and public relations expense decreased $0.5 million or 24.5% for the quarter from the third quarter of 2002 and $1.5 million or 26.5% for the nine months ended September 30, 2003 compared to the same periods a year ago. The decrease reflects less media-intensive marketing campaigns as Citizens adopted a more focused marketing strategy, seeking higher exposure at lower costs. Bankcard expense declined $55,000 or 41.0% for the quarter and $3.5 million or 93.1% for the nine month period ended September 30, 2003 compared to the same periods of 2002 due to the sale of Citizens' merchant services business in the second quarter of 2002. In the third quarter of 2002, Citizens recorded a special charge of $13.8 million for restructuring initiatives within its three major lines of business (consumer banking, business banking and wealth management) to be able to compete more effectively, reduce layers of management, be more customer oriented, and be better positioned to grow core deposits and loans. At the same time, Citizens also charged to noninterest expense $7.1 million of other significant items considered unusual in nature. These charges included a $3.3 million prepayment penalty on high cost FHLB debt, a $2.0 million contribution to the charitable trust, $0.4 million of additional equipment depreciation described previously and $1.4 million included in other noninterest expense as described below. Other noninterest expense increased $0.9 million, or 15.4% for the quarter and was virtually unchanged for the nine months ended September 30, 2003 compared to the same periods in 2002. The increase in the third quarter of 2003 compared to same quarter in 2002 was primarily due to a loss of $0.5 million on the sale of other real estate ("ORE"), higher state taxes of $0.6 million due to Citizens' net loss and higher loan charge-offs in the third quarter of 2002, and $0.6 million associated with the implementation of new strategic alliances between Citizens' trust bank subsidiary, Citizens Bank Wealth Management N.A., and two third party vendors, SEI Investments and EnvestnetPMC. Partially offsetting these increases were $1.4 million of other charges recorded in the third quarter of 2002, which included an ORE market valuation adjustment of $1.0 million and other charges of $0.5 million. For the nine months ended September 30, 2003 compared to the same period in 2002, higher ORE expenses of $1.2 million, state taxes of $0.3 million, SEI Investments and EnvestnetPMC implementation costs of $0.8 million were essentially offset by the $1.4 million of other charges in the third quarter of 2002, a contract termination fee of $0.6 million in the first half of 2002 as servicing for Citizens' debit card portfolio was brought back in-house and fewer fraud and other losses recorded in 2003. Noninterest expense is expected to remain relatively flat in the fourth quarter of 2003 compared to third quarter 2003 levels as additional marketing expenses targeting selected markets and deposit products are offset by lower mortgage-related compensation. CREDIT QUALITY Nonperforming assets totaled $91.2 million or 1.17% of assets, at September 30, 2003, representing a decrease of $5.4 million or 5.5% from second quarter 2003 levels. The allowance for loan losses remained unchanged at $126.0 million or 2.41% of loans at September 30, 2003. Allowance for loan losses as a percent of nonperforming loans increased to 150.16%, compared to 104.17% for third quarter 2002. Net loans charged off during the quarter totaled $10.3 million or 0.8% of average loans (annualized), compared with $12.0 million in the second quarter of 2003 and $65.5 million in the third quarter of 2002. As previously forecasted, Citizens expects provision expense and net charge-offs to each be less than $11 million again in the fourth quarter of 2003. INITIATIVES Earlier this year, William R. Hartman, chairman, president and CEO, announced Citizens' new vision to staff members along with the elements required to reach the vision, termed "Achieving the Vision." A learning center called "Citizens University" was established to provide staff members with the information they need to understand their personal role in achieving the company's vision. By the end of 2003 all staff members will have attended Citizens University sessions, submitted suggestions for process improvements and made commitments as to their personal contributions. Management and an evaluation team of cross-functional staff members from across the Company reviewed these suggestions during the third quarter and many will be implemented in coming months. A total of more than 60 initiatives fall under the "Achieving the Vision" process. The status of each of these initiatives is overseen by a team of project managers who, in turn, report progress on the initiatives throughout the company. DIVIDEND ANNOUNCEMENT The Board of Directors of Citizens Banking Corporation declared a cash dividend of $0.285 per share of common stock. The dividend is payable on November 5, 2003, to shareholders of record on October 24, 2003. OTHER NEWS On October 16, 2003, Citizens announced the appointment of Clinton A. Sampson as executive vice president for the Corporation. Sampson will serve as regional chairman and be responsible for commercial banking relationships in Michigan. He is a veteran commercial banker with more than 30 years experience in the industry. During this time, he has held leadership roles in the areas of middle market, large corporate and international sales. Randall J. Peterson, currently president and CEO of F&M Bank has also been appointed executive vice president for the Corporation and will serve as regional chairman with responsibilities for commercial banking relationships in Wisconsin, Illinois and Iowa. James A. Schmelter was appointed to executive vice president and head of Citizens' wealth management line of business on August 28, 2003. Additionally, he will serve in the role of president and chief executive officer of Citizens Bank Wealth Management, N.A., Citizens' wealth management subsidiary. Prior to joining Citizens, Schmelter was senior vice president and head of Private Client Services for Bank One Corporation's Cleveland, Ohio market. In this position he was responsible for managing private banking, trust, and investment business with high net worth clients throughout Northeast Ohio. On October 16, 2003, Citizens named Michael J. Sonego as senior vice president and head of its residential mortgage banking and title services areas. In this position, Sonego is responsible for the performance and origination of retail and wholesale residential mortgages and title services. Prior to joining Citizens, Sonego was with Bank One and its predecessors for nearly 20 years in various positions. In 1998 he became the national mortgage sales manager for Bank One where he designed and implemented national management structure which includes managing originators, sales managers and division managers in 14 states. In 2002 he became a market business manager in Private Client Services responsible for Troy and Grosse Pointe, Michigan offices including private banking, trust advisors, and client advisors as well as estate planning, financial planning and insurance for clients. Wendy K. Hemingway was named senior vice president and director of commercial products and sales for Citizens on July 29, 2003. The appointment of Hemingway to this new position will be instrumental in dramatically upgrading Citizens' treasury management products and services and promoting the sale of these non-credit business products. Prior to joining Citizens, Hemingway's experience includes holding the position of director of public funds, where she was responsible for growth in the non-profit, municipal and association sectors. She was most recently employed by Fifth Third Bank in South Eastern Michigan. She has extensive experience in Treasury Management product sales. On August 7, 2003, Citizens announced the appointment of Martin E. Grunst as senior vice president and treasurer for the Corporation. Grunst will be responsible for the Corporation's investment, asset liability management, funds transfer pricing, wholesale lending and capital management functions. His past experience includes asset liability management for retail banking for Bank One Corporation, where he also served as financial manager for business banking merger integration among several other positions. On July 28, 2003, Citizens announced the appointment of Lin Abbott as its new information technology manager. As the IT manager, Abbott is responsible for the overall coordination and maintenance of the information technology function for Citizens. These functions include networks, telecommunications, microcomputer support, technical help desk, and webmaster responsibilities. Prior to joining Citizens, Abbott was an infrastructure and operations director with another banking company where he was responsible for the vision, charter and implementation of the enterprise command center's operations and management functions. During the third quarter of 2003, Citizens repurchased a total of 75,000 shares of its stock at an average price of $26.01. Since the stock repurchase program was announced in October 2001, Citizens has repurchased 2,578,200 shares at an average price of $28.13. As of September 30, 2003, 421,800 shares remain to be purchased under the current program. CONFERENCE CALL ANNOUNCEMENT William R. Hartman, chairman, president and CEO, Charles D. Christy, CFO and John D. Schwab, chief credit officer, will review the quarter's results in a conference call for investors and analysts beginning at 1:00 PM EDT ON FRIDAY, OCTOBER 17, 2003. To participate in the conference call, please call the number below approximately 10 minutes prior to the scheduled conference time: US/Canada Dial-In Number: (800) 374-2419 International Dial-In Number: (706) 634-1073 Conference ID: 2984001 Conference Name: "Citizens Banking Corporation 3rd Quarter Earnings" R.S.V.P. is not required. A playback of the conference call will be available after 5:00pm EDT through October 24, 2003, by dialing US/Canada Dial-In Number: (800) 642-1687 or International Dial-In Number: (706) 645-9291 conference ID: 2984001. Also, the call can be accessed via Citizens' web site at www.CitizensOnline.com through the Investor Relations section by clicking on Presentations or directly at http://www.snl.com/Interactive/IR/presentations.asp?IID=100175. CORPORATE PROFILE Citizens Banking Corporation is a diversified financial services company providing a full range of commercial, consumer, mortgage banking, trust and financial planning services to a broad client base. Citizens operates 176 branch, private banking, and financial center locations throughout Michigan, Wisconsin, Iowa, and in suburban Chicago, Illinois. CONTACT: Charles D. Christy Chief Financial Officer (810) 237-4200 Charlie.Christy@cbcf-net.com CONTACT: Ryan P. Mathews VP Investor Relations (810) 257-2489 Ryan.Mathews@cbcf-net.com TRADED: NASDAQ SYMBOL: CBCF Safe Harbor Statement Discussions in this release that are not statements of historical fact (including statements that include terms such as "believe", "expect", and "anticipate") are forward-looking statements that involve risks and uncertainties, and the Company's actual future results could materially differ from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, adverse changes in the Company's loan and lease portfolios and the resulting credit risk-related losses and expenses, the Company's future lending and collections experience and the potential inadequacy of the Company's loan loss reserves, interest rate fluctuations and other adverse changes in economic or financial market conditions, the potential inability to hedge certain risks economically, adverse changes in competition and pricing environments, the Company's potential failure to maintain or improve loan quality levels and origination volume, the Company's potential inability to continue to attract core deposits, the potential lack of market acceptance of the Company's products and services, adverse changes in the Company's relationship with major customers, unanticipated technological changes that require major capital expenditures, adverse changes in applicable laws and regulatory requirements, unanticipated environmental liabilities or costs, the Company's potential inability to integrate acquired operations or complete our restructuring, the effects of terrorist attacks and potential attacks, the Company's success in managing the risks involved in the foregoing, and other risks and uncertainties detailed from time to time in the company's filings with the Securities and Exchange Commission. Other factors not currently anticipated by management may also materially and adversely affect the Company's results of operations. The Company does not undertake, and expressly disclaims any obligation, to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. #### (Financial highlights follow) Visit our Web site at http://www.CitizensOnline.com

------------------------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS (UNAUDITED) CITIZENS BANKING CORPORATION AND SUBSIDIARIES SEPTEMBER 30, December 31, (in thousands) 2003 2002(1) ------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 180,896 $ 171,864 Money market investments: Federal funds sold --- 69,000 Interest-bearing deposits with banks 2,368 2,332 ------------- ------------- Total money market investments 2,368 71,332 Securities available-for-sale: Taxable 1,554,925 1,021,668 Tax-exempt 432,903 435,613 ------------- ------------- Total securities available-for-sale 1,987,828 1,457,281 Securities held-to-maturity (fair value of $7,186) 7,262 --- Mortgage loans held for sale 132,627 160,743 Loans 5,226,386 5,432,561 Less: Allowance for loan losses (125,955) (109,467) ------------- ------------- Net loans 5,100,431 5,323,094 Premises and equipment 112,089 117,704 Goodwill 54,785 54,785 Other intangible assets 17,688 19,862 Bank owned life insurance 79,929 78,434 Other assets 108,461 66,935 ------------- ------------- TOTAL ASSETS $ 7,784,364 $ 7,522,034 ============= ============= LIABILITIES Noninterest-bearing deposits $ 878,536 $ 900,674 Interest-bearing deposits 4,603,657 5,036,239 ------------- ------------- Total deposits 5,482,193 5,936,913 Federal funds purchased and securities sold under agreements to repurchase 610,865 223,289 Other short-term borrowings 41,564 79,062 Other liabilities 74,993 32,988 Long-term debt 940,605 599,313 ------------- ------------- Total liabilities 7,150,220 6,871,565 SHAREHOLDERS' EQUITY Preferred stock - no par value Common stock - no par value 100,425 112,253 Retained earnings 506,318 495,570 Other accumulated comprehensive net income 27,401 42,646 ------------- ------------- Total shareholders' equity 634,144 650,469 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,784,364 $ 7,522,034 ============= ============= -------------------------------------------------------------------------------------------------

(1) Certain amounts have been reclassified to conform with current year presentation.

----------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) CITIZENS BANKING CORPORATION AND SUBSIDIARIES Three Months Ended Nine Months Ended September 30, September 30, (in thousands, except per share amounts) 2003 2002(1) 2003 2002(1) ----------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $ 80,371 $ 95,924 $ 247,394 $ 292,912 Interest and dividends on investment securities: Taxable 14,254 14,150 45,795 41,121 Tax-exempt 5,059 5,319 15,288 16,038 Money market investments 3 165 102 755 --------- --------- --------- --------- Total interest income 99,687 115,558 308,579 350,826 --------- --------- --------- --------- INTEREST EXPENSE Deposits 18,851 31,725 66,410 99,160 Short-term borrowings 1,463 1,007 3,497 2,876 Long-term debt 8,219 7,644 23,092 23,240 --------- --------- --------- --------- Total interest expense 28,533 40,376 92,999 125,276 --------- --------- --------- --------- NET INTEREST INCOME 71,154 75,182 215,580 225,550 Provision for loan losses 10,300 89,250 54,942 103,900 --------- --------- --------- --------- Net interest income (loss) after provision for loan losses 60,854 (14,068) 160,638 121,650 --------- --------- --------- --------- NONINTEREST INCOME Service charges on deposit accounts 7,703 6,620 21,842 19,767 Trust fees 4,368 4,372 12,912 14,260 Mortgage and other loan income 5,404 2,928 15,967 9,825 Brokerage and investment fees 2,333 2,337 6,015 7,020 Bankcard fees 761 672 2,310 5,359 Investment securities gains (losses) 42 45 101 (12) Gain on sale of merchant business --- --- --- 5,400 Gain on securitized mortgages --- --- --- 2,436 Other 4,443 2,760 14,041 11,020 --------- --------- --------- --------- Total noninterest income 25,054 19,734 73,188 75,075 --------- --------- --------- --------- NONINTEREST EXPENSE Salaries and employee benefits 31,036 32,218 92,548 96,262 Equipment 4,060 5,167 12,098 14,981 Occupancy 4,328 4,307 13,337 13,506 Professional services 4,946 3,524 12,613 9,713 Data processing services 3,225 3,066 9,599 9,441 Postage and delivery 1,739 1,860 5,100 5,375 Advertising and public relations 1,395 1,848 4,067 5,535 Telephone 1,169 1,268 3,479 4,103 Stationery and supplies 911 907 2,679 3,021 Bankcard expense 79 134 261 3,787 Special charge (370) 13,807 (691) 13,807 Prepayment penalty on FHLB advances --- 3,300 --- 3,300 Contribution to charitable trust --- 2,000 --- 2,000 Other 7,082 6,139 17,452 17,426 --------- --------- --------- --------- Total noninterest expense 59,600 79,545 172,542 202,257 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES 26,308 (73,879) 61,284 (5,532) Income tax provision (benefit) 6,703 (27,950) 13,407 (9,045) --------- --------- --------- --------- NET INCOME (LOSS) $ 19,605 $ (45,929) $ 47,877 $ 3,513 ========= ========= ========= ========= NET INCOME (LOSS) PER SHARE: Basic $ 0.45 $ (1.03) $ 1.10 $ 0.08 Diluted 0.45 (1.03) 1.10 0.08 AVERAGE SHARES OUTSTANDING: Basic 43,227 44,610 43,326 44,819 Diluted 43,501 44,610 43,574 45,295 -----------------------------------------------------------------------------------------------------------------------------

(1) Certain amounts have been reclassified to conform with current year presentation.

------------------------------------------------------------------------------------------------------------------------------------ SELECTED QUARTERLY INFORMATION Citizens Banking Corporation and Subsidiaries 3RD QTR 2003 2ND QTR 2003 1ST QTR 2003 4TH QTR 2002 3RD QTR 2002 ------------------------------------------------------------------------------------------------------------------------------------ SUMMARY OF OPERATIONS (THOUSANDS) Interest income (1) $ 99,687 $ 104,683 $ 104,209 $ 112,558 $ 115,558 Interest expense 28,533 31,763 32,703 36,326 40,376 Net interest income 71,154 72,920 71,506 76,232 75,182 Provision for loan losses 10,300 25,650 18,992 16,300 89,250 Net interest income (loss) after provision for loan losses 60,854 47,270 52,514 59,932 (14,068) Noninterest income (1) 25,054 24,847 23,287 26,701 19,734 Noninterest expense (1) 59,600 56,361 56,581 57,126 79,545 Income tax provision (benefit) 6,703 2,542 4,162 7,982 (27,950) Net income (loss) 19,605 13,214 15,058 21,525 (45,929) ------------------------------------------------------------------------------------------------------------------------------------ AT PERIOD END (MILLIONS) Total assets $ 7,784 $ 7,786 $ 7,765 $ 7,522 $ 7,614 Total earning assets 7,356 7,334 7,285 7,122 7,149 Total loans 5,226 5,287 5,303 5,433 5,524 Total deposits 5,482 5,660 5,812 5,937 5,904 Total shareholders' equity 634 639 640 650 668 ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE BALANCES (MILLIONS) Total assets $ 7,812 $ 7,809 $ 7,454 $ 7,564 $ 7,616 Total earning assets 7,378 7,387 7,043 7,141 7,194 Total loans 5,183 5,253 5,343 5,470 5,577 Total deposits 5,610 5,723 5,853 5,922 5,951 Total shareholders' equity 620 639 643 654 711 Shareholders' equity / assets 7.94% 8.18% 8.63% 8.65% 9.34% ------------------------------------------------------------------------------------------------------------------------------------ CREDIT QUALITY STATISTICS (THOUSANDS) Nonaccrual loans $ 83,278 $ 87,928 $ 84,107 $ 86,717 $ 98,732 Loans 90 or more days past due and still accruing 601 607 990 860 1,260 Restructured loans --- --- --- --- --- --------- --------- --------- --------- --------- Total nonperforming loans 83,879 88,535 85,097 87,577 99,992 Other repossessed assets acquired (ORAA) 7,350 8,044 8,226 8,094 8,025 --------- --------- --------- --------- --------- Total nonperforming assets $ 91,229 $ 96,579 $ 93,323 $ 95,671 $ 108,017 ========= ========= ========= ========= ========= Allowance for loan losses $ 125,955 $ 125,992 $ 112,385 $ 109,467 $ 104,158 Allowance for loan losses ratio 2.41% 2.38% 2.12% 2.02% 1.89% Allowance for loan losses as a percent of nonperforming assets 138.06 130.45 120.43 114.42 96.43 Allowance for loan losses as a percent of nonperforming loans 150.16 142.31 132.07 125.00 104.17 Nonperforming assets as a percent of loans plus ORAA 1.74 1.82 1.76 1.76 1.95 Nonperforming assets as a percent of total assets 1.17 1.24 1.20 1.27 1.42 Net loans charged off as a percent of average loans (annualized) 0.80 0.92 1.20 0.80 4.70 Net loans charged off (000) $ 10,337 $ 12,043 $ 16,074 $ 10,991 $ 65,539 ------------------------------------------------------------------------------------------------------------------------------------ PER COMMON SHARE DATA Net Income (loss): Basic $ 0.45 $ 0.30 $ 0.35 $ 0.49 $ (1.03) Diluted 0.45 0.30 0.34 0.48 (1.03) Dividends 0.285 0.285 0.285 0.285 0.285 Market Value: High $ 28.01 $ 28.17 $ 26.05 $ 26.46 $ 29.43 Low 24.77 21.72 23.58 21.25 23.35 Close 26.41 27.01 23.62 24.78 24.17 Book value 14.67 14.77 14.79 14.88 14.97 Shares outstanding, end of period (000) 43,220 43,260 43,299 43,702 44,631 ------------------------------------------------------------------------------------------------------------------------------------ PERFORMANCE RATIOS (ANNUALIZED) Net interest margin (FTE) 4.03% 4.17% 4.33% 4.49% 4.40% Return on average assets 1.00 0.68 0.82 1.13 (2.39) Return on average shareholders' equity 12.55 8.29 9.50 13.06 (25.63) Efficiency ratio 59.90 55.74 57.58 53.61 80.75 ------------------------------------------------------------------------------------------------------------------------------------

(1) Third quarter amounts for 2002 include other charges of $701,000 in interest income, $1,587,000 in noninterest income, $7,068,000 in noninterest expense and a special charge of $13,807,000 in noninterest expense.

----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL SUMMARY AND COMPARISON FOR THE NINE MONTHS ENDED CITIZENS BANKING CORPORATION AND SUBSIDIARIES SEPTEMBER 30, 2003 2002 % CHANGE ----------------------------------------------------------------------------------------------------------------------------------- Summary of Operations (thousands) Interest income (1) $ 308,579 $ 350,826 (12.0)% Interest expense 92,999 125,276 (25.8) Net interest income 215,580 225,550 (4.4) Provision for loan losses 54,942 103,900 (47.1) Net interest income after provision for loan losses 160,638 121,650 32.0 Noninterest income (1) 73,188 75,075 (2.5) Noninterest expense (1) 172,542 202,257 (14.7) Income tax provision (benefit) 13,407 (9,045) (248.2) Net income 47,877 3,513 1,262.9 ----------------------------------------------------------------------------------------------------------------------------------- AT PERIOD END (MILLIONS) Total assets $ 7,784 $ 7,614 2.2% Total earning assets 7,356 7,149 2.9 Total loans 5,226 5,524 (5.4) Total deposits 5,482 5,904 (7.1) Total shareholders' equity 634 668 (5.1) ----------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES (MILLIONS) Total assets $ 7,693 $ 7,571 1.6% Total earning assets 7,271 7,167 1.5 Total loans 5,259 5,578 (5.7) Total deposits 5,728 5,925 (3.3) Total shareholders' equity 634 705 (10.1) Shareholders' equity / assets 8.24% 9.31% (11.5) ----------------------------------------------------------------------------------------------------------------------------------- PER COMMON SHARE DATA Net Income: Basic $ 1.10 $ 0.08 1,275.0% Diluted 1.10 0.08 1,275.0 Dividends 0.855 0.845 1.2 Market Value: High $ 28.17 $ 33.88 (16.9) Low 21.72 23.35 (7.0) Close 26.41 24.17 9.3 Book value 14.67 14.97 (2.0) Tangible book value 13.00 13.21 (1.6) Shares outstanding, end of period (000) 43,220 44,631 (3.2) ----------------------------------------------------------------------------------------------------------------------------------- PERFORMANCE RATIOS (ANNUALIZED) Net interest margin (FTE) (2) 4.15% 4.43% (6.3)% Return on average assets 0.83 0.06 1,283.3 Return on average shareholders' equity 10.10 0.67 1,407.5 Net loans charged off as a percent of average loans 0.97 1.91 (49.2) -----------------------------------------------------------------------------------------------------------------------------------

(1) Amounts for 2002 include other charges of $701,000 in interest income, $1,587,000 in noninterest income, $7,068,000 in noninterest expense and a special charge of $13,807,000 in noninterest expense. Noninterest income for 2002 also includes net investment securities gains of $2,379,000 and gain on sale of merchant business of $5,400,000. (2) Net interest margin is presented on an annual basis and includes taxable equivalent adjustments to interest income of $10,120,000 and $10,843,000 for the nine months ended September 30, 2003 and 2002, respectively, based on a tax rate of 35%.

----------------------------------------------------------------------------------------------------------------------------------- NONINTEREST INCOME AND NONINTEREST EXPENSE (UNAUDITED) Citizens Banking Corporation and Subsidiaries Quarter Ended ------------------------------------------------------------------------------ Sept 30 June 30 Mar 31 Dec 31 Sept 30 (in thousands) 2003 2003 2003 2002 2002 ----------------------------------------------------------------------------------------------------------------------------------- NONINTEREST INCOME: Service charges on deposit accounts $ 7,703 $ 7,549 $ 6,590 $ 6,689 $ 6,620 Trust fees 4,368 4,324 4,220 4,696 4,372 Mortgage and other loan income 5,404 5,409 5,154 7,020 2,928 Brokerage and investment fees 2,333 1,914 1,768 2,482 2,337 Bankcard fees 761 814 735 783 672 Investment securities gains 42 11 48 12 45 Other income: Writedown of equity investment --- --- --- --- (662) Cash surrender value adjustment --- --- --- --- (650) Other charges --- --- --- --- (275) Other 4,443 4,826 4,772 5,019 4,347 -------- -------- -------- -------- -------- Total other income 4,443 4,826 4,772 5,019 2,760 -------- -------- -------- -------- -------- TOTAL NONINTEREST INCOME $ 25,054 $ 24,847 $ 23,287 $ 26,701 $ 19,734 ======== ======== ======== ======== ======== NONINTEREST EXPENSE: Salaries and employee benefits $ 31,036 $ 31,400 $ 30,112 $ 30,585 $ 32,218 Equipment 4,060 3,869 4,169 4,888 5,167 Occupancy 4,328 4,314 4,695 4,349 4,307 Professional services 4,946 3,959 3,708 5,077 3,524 Data processing services 3,225 3,058 3,316 3,200 3,066 Postage and delivery 1,739 1,683 1,678 1,745 1,860 Advertising and public relations 1,395 623 2,049 (423) 1,848 Telephone 1,169 1,135 1,175 1,176 1,268 Stationery and supplies 911 873 895 1,011 907 Bankcard expense 79 91 91 92 134 Special charge (370) (221) (100) (405) 13,807 Prepayment penalty on FHLB advances --- --- --- --- 3,300 Contribution to charitable trust --- --- --- --- 2,000 Other expense 7,082 5,577 4,793 5,831 6,139 -------- -------- -------- -------- -------- TOTAL NONINTEREST EXPENSE $ 59,600 $ 56,361 $ 56,581 $ 57,126 $ 79,545 ======== ======== ======== ======== ======== -----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES, YIELDS AND RATES THREE MONTHS ENDED ------------------------------------------------------------------------------ 09/30/03 06/30/03 09/30/02 ------------------------------------------------------------------------------ AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE (in thousands) BALANCE RATE (1) BALANCE RATE (1) BALANCE RATE (1) ----------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Money market investments $ 3,927 0.30 % $ 7,715 0.61 % $ 41,538 1.55 % Investment securities(2): Taxable 1,526,583 3.73 1,484,937 4.61 1,009,300 5.61 Tax-exempt 401,302 7.76 396,288 7.83 416,550 7.86 Mortgage loans held for sale 234,793 5.26 183,545 5.70 82,804 8.29 Loans: Commercial 3,049,878 5.54 3,164,230 5.68 3,368,262 6.21 Real estate 481,337 6.34 548,778 6.19 681,658 7.03 Direct consumer 937,133 6.27 890,033 6.59 848,198 7.63 Indirect consumer 714,302 7.24 649,677 7.43 679,362 8.17 ----------- ----------- ---------- Total earning assets 7,349,255 5.58 7,325,203 5.91 7,127,672 6.65 NONEARNING ASSETS Cash and due from banks 183,214 163,210 182,153 Investment security fair value adjustment 28,909 62,182 65,960 Other nonearning assets 375,185 376,946 321,965 Allowance for loan losses (124,964) (118,463) (82,244) ----------- ----------- ---------- Total assets $ 7,811,599 $ 7,809,078 $7,615,506 =========== =========== ========== INTEREST-BEARING LIABILITIES Deposits: Interest-bearing demand $ 1,334,765 0.75 $ 1,289,092 0.96 $1,151,589 1.64 Savings deposits 1,332,519 0.55 1,355,646 0.79 1,374,149 1.19 Time deposits 2,054,257 2.84 2,209,352 3.05 2,539,356 3.57 Short-term borrowings 561,427 1.03 476,878 1.19 249,531 1.60 Long-term debt 937,941 3.47 877,184 3.58 615,124 4.93 ----------- ----------- ---------- Total interest-bearing liabilities 6,220,909 1.83 6,208,152 2.05 5,929,749 2.70 NONINTEREST-BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand 888,440 869,347 886,387 Other liabilities 82,150 92,470 88,392 Shareholders' equity 620,100 639,109 710,978 ----------- ----------- ---------- Total liabilities and shareholders' equity $ 7,811,599 $ 7,809,078 $7,615,506 =========== =========== ========== INTEREST SPREAD 3.75 % 3.86 % 3.95 % Contribution of noninterest bearing sources of funds 0.28 0.31 0.45 ---- ---- ---- NET INTEREST INCOME AS A PERCENT OF EARNING ASSETS 4.03 % 4.17 % 4.40 %

----------------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED -------------------------------------------------------- 09/30/03 09/30/02 -------------------------------------------------------- AVERAGE AVERAGE AVERAGE AVERAGE (in thousands) BALANCE RATE (1) BALANCE RATE (1) ----------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Money market investments $ 14,137 0.95 % $ 68,843 1.45 % Investment securities(2): Taxable 1,359,305 4.49 943,410 5.81 Tax-exempt 401,022 7.82 418,108 7.87 Mortgage loans held for sale 185,891 5.54 109,458 7.66 Loans: Commercial 3,155,940 5.64 3,350,474 6.31 Real estate 538,880 6.30 729,941 7.11 Direct consumer 895,155 6.56 832,054 7.86 Indirect consumer 668,772 7.45 665,952 8.19 ----------- ---------- Total earning assets 7,219,102 5.86 7,118,240 6.79 NONEARNING ASSETS Cash and due from banks 172,681 180,701 Investment security fair value adjustment 51,598 48,796 Other nonearning assets 368,973 304,525 Allowance for loan losses (119,411) (81,146) ----------- ---------- Total assets $ 7,692,943 $7,571,116 =========== ========== INTEREST-BEARING LIABILITIES Deposits: Interest-bearing demand $ 1,312,898 0.94 $1,112,259 1.61 Savings deposits 1,352,398 0.73 1,364,617 1.18 Time deposits 2,192,473 3.03 2,584,035 3.81 Short-term borrowings 418,967 1.10 231,807 1.66 Long-term debt 835,990 3.65 624,349 4.98 ----------- ---------- Total interest-bearing liabilities 6,112,726 2.02 5,917,067 2.83 NONINTEREST-BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand 870,039 864,238 Other liabilities 76,073 85,273 Shareholders' equity 634,105 704,538 ----------- ---------- Total liabilities and shareholders' equity $ 7,692,943 $7,571,116 =========== ========== INTEREST SPREAD 3.84 % 3.96 % Contribution of noninterest bearing sources of funds 0.31 0.47 ---- ---- NET INTEREST INCOME AS A PERCENT OF EARNING ASSETS 4.15 % 4.43 % -----------------------------------------------------------------------------------------------------------------------------------

(1) Average rates are presented on an annual basis and include taxable equivalent adjustments to interest income. (2) 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.

------------------------------------------------------------------------------------------------------------------------------------ NONPERFORMING ASSETS CITIZENS BANKING CORPORATION AND SUBSIDIARIES Quarter Ended ----------------------------------------------------------------- Sept 30 June 30 Mar 31 Dec 31 Sept 30 (in thousands) 2003 2003 2003 2002 2002 ------------------------------------------------------------------------------------------------------------------------------------ Commercial(1) Commercial $ 51,158 $ 52,760 $ 49,275 50,231 48,374 Commercial real estate 17,379 19,568 20,433 19,301 28,488 Small business 1,648 1,466 1,459 813 588 -------- -------- -------- -------- -------- Total commercial 70,185 73,794 71,167 70,345 77,450 Consumer: Direct 3,291 3,208 3,416 3,704 3,512 Indirect 1,625 1,094 1,646 1,803 1,657 Mortgage 8,177 9,832 7,878 10,865 16,113 Loans 90 days or more past due and still accruing 601 607 990 860 1,260 Restructured loans --- --- --- --- --- -------- -------- -------- -------- -------- Total Nonperforming Loans 83,879 88,535 85,097 87,577 99,992 Other Repossessed Assets Acquired 7,350 8,044 8,226 8,094 8,025 -------- -------- -------- -------- -------- Total Nonperforming Assets $ 91,229 $ 96,579 $ 93,323 $ 95,671 $108,017 ======== ======== ======== ======== ========

------------------------------------------------------------------------------------------------------------------------------------ (1) Changes in commercial nonperforming assets for the quarter (in millions): Inflows $ 21.1 $ 36.3 $ 22.7 $ 27.6 $ 51.1 Outflows (24.7) (33.7) (21.9) (34.7) (30.3) -------- -------- -------- -------- -------- Net change $ (3.6) $ 2.6 $ 0.8 $ (7.1) $ 20.8 ======== ======== ======== ======== ========

------------------------------------------------------------------------------------------------------------------------------------ SUMMARY OF LOAN LOSS EXPERIENCE Citizens Banking Corporation and Subsidiaries Quarter Ended ----------------------------------------------------------------------- Sept 30 June 30 Mar 31 Dec 31 Sept 30 (in thousands) 2003 2003 2003 2002 2002 ------------------------------------------------------------------------------------------------------------------------------------ Allowance for loan losses - beginning of period $125,992 $112,385 $109,467 $104,158 $ 80,447 Provision for loan losses 10,300 25,650 18,992 16,300 89,250 Charge-offs: Commercial 9,539 7,577 14,133 10,058 56,042 Commercial real estate 1,531 4,321 955 159 5,452 Small business 348 273 264 159 1,596 -------- -------- -------- -------- -------- Total commercial 11,418 12,171 15,352 10,376 63,090 Real estate mortgage 213 76 625 1,745 229 Consumer - Direct 1,628 1,790 1,748 1,474 2,478 Consumer - Indirect 1,941 2,152 2,511 2,582 2,035 -------- -------- -------- -------- -------- Total charge-offs 15,200 16,189 20,236 16,177 67,832 -------- -------- -------- -------- -------- Recoveries: Commercial 2,882 2,115 2,032 3,862 1,004 Commercial real estate 595 623 465 45 11 Small business 139 93 362 86 50 -------- -------- -------- -------- -------- Total commercial 3,616 2,831 2,859 3,993 1,065 Real estate mortgage 27 8 1 --- 11 Consumer - Direct 504 479 439 400 463 Consumer - Indirect 716 828 863 793 754 -------- -------- -------- -------- -------- Total recoveries 4,863 4,146 4,162 5,186 2,293 -------- -------- -------- -------- -------- Net charge-offs 10,337 12,043 16,074 10,991 65,539 -------- -------- -------- -------- -------- Allowance for loan losses - end of period $125,955 $125,992 $112,385 $109,467 $104,158 ======== ======== ======== ======== ========

------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------- --------------------------------------------------- For the Quarter Ended 09/30/03 For the Nine Months Ended 09/30/03 ----------------------------------------------------- --------------------------------------------------- Consumer - Consumer - Consumer - Consumer - Commercial Real estate Direct Indirect Total Commercial Real estate Direct Indirect Total ----------------------------------------------------- --------------------------------------------------- Charge-offs: Michigan $ 6,725 $ 106 $ 1,282 $ 1,941 $10,054 $26,867 $ 850 $ 3,557 $ 6,604 $37,878 Wisconsin 4,293 59 237 --- 4,589 10,631 (70) 1,281 --- 11,842 Iowa 150 48 90 --- 288 797 134 273 --- 1,204 Illinois 250 --- 19 --- 269 646 --- 55 --- 701 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total charge-offs 11,418 213 1,628 1,941 15,200 38,941 914 5,166 6,604 51,625 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Recoveries: Michigan 1,599 --- 376 710 2,685 5,009 --- 1,022 2,390 8,421 Wisconsin 893 21 90 --- 1,004 2,914 22 296 --- 3,232 Iowa 24 6 34 --- 64 75 14 74 --- 163 Illinois 1,100 --- 4 6 1,110 1,308 --- 30 17 1,355 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total recoveries 3,616 27 504 716 4,863 9,306 36 1,422 2,407 13,171 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Net charge-offs $ 7,802 $ 186 $ 1,124 $ 1,225 $10,337 $29,635 $ 878 $ 3,744 $ 4,197 $38,454 ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ------------------------------------------------------------------------------------------------------------------------------------