8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 25, 2012

Citizens Republic Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Michigan	001-33063	38-2378932
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
328 South Saginaw Street, Flint, Michigan		48502
(Address of Principal Executive Offices)		(Zip Code)

(810) 766-7500

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 25, 2012, Citizens Republic Bancorp, Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2012 and certain other information. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), the attached press release furnished herewith presents non-GAAP financial measures such as tangible equity to tangible assets ratio, tangible common equity to tangible assets ratio, Tier 1 common equity ratio, pre-tax pre-provision profit, net interest margin, the efficiency ratio, and adjusted earnings per share. Citizens believes these non-GAAP financial measures provide additional information that is useful to investors in understanding the underlying performance of Citizens, its business and performance trends, and such measures help facilitate performance comparisons with others in the banking industry. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their use of such measures. To mitigate these limitations, Citizens has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that Citizens’ performance is properly reflected to facilitate consistent period-to-period comparisons. Although Citizens believes the above non-GAAP financial measures disclosed in the attached release enhance investors’ understanding of its business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.

Tangible Equity, Tangible Common Equity and Tier 1 Common Equity Ratios (non-GAAP financial measures)

Citizens believes the exclusion of goodwill and other intangible assets to create “tangible assets” and “tangible equity” facilitates the comparison of results for ongoing business operations. Citizens’ management internally assesses the company’s performance based, in part, on these non-GAAP financial measures. The tangible common equity ratio and Tier 1 common equity ratio have become a focus of some investors and management believes that these ratios may assist investors in analyzing Citizens’ capital position absent the effects of intangible assets and preferred stock. Because tangible common equity and Tier 1 common equity are not formally defined by GAAP or codified in the federal banking regulations, these measures are considered to be non-GAAP financial measures. Because analysts and banking regulators may assess Citizens’ capital adequacy using tangible common equity and Tier 1 common equity, Citizens believes that it is useful to provide investors the ability to assess its capital adequacy on the same basis. Tier 1 common equity is often expressed as a percentage of net risk-weighted assets. Under the risk-based capital framework, a bank’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weight assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (net

risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity as shown in the Non-GAAP Reconciliation Table in the attached release. The amounts disclosed as net risk-weighted assets are calculated consistent with banking regulatory requirements.

Pre-Tax Pre-Provision Profit (non-GAAP financial measure)

Pre-tax pre-provision profit (“PTPP”), as defined by Citizens’ management represents total revenue (total net interest income and noninterest income) excluding any securities gains/losses, fair-value adjustments on loans held for sale, interest rate swaps, and bank owned life insurance, less noninterest expense excluding any goodwill impairment charges, credit writedowns, fair-value adjustments, merger costs, and special assessments. While certain of these items are an integral part of Citizens’ banking operations, in each case, the excluded items are items that management believes are particularly impacted by economic stress or significant changes in the credit cycle and are therefore likely to make it more difficult to understand our underlying performance trends and the ability of our banking operations to generate revenue. Net interest income, noninterest income and noninterest expense are all calculated in accordance with GAAP and are presented in the consolidated statement of operations. While noninterest income and noninterest expense are adjusted for the specific items listed above in the calculation of PTPP, these adjustments represent the excluded items in their entirety for each period presented to better facilitate period-to-period comparisons.

Viewed together with Citizens’ GAAP results, PTPP provides management, investors and others with a useful metric to evaluate and better understand trends in Citizens’ period-to-period earnings power and ability to generate capital to cover credit losses, in each case exclusive of the effects of economic stress and the credit cycle. As recent results for the banking industry demonstrate, loan charge-offs, related credit provision, and credit writedowns can vary significantly from period to period, making a measure that helps isolate the impact of credit costs on profitability all the more important to investors. The “Credit Quality” section of the attached release isolates the challenges and issues related to the credit quality of Citizens’ loan portfolio and their impact on Citizens’ earnings as reflected in the provision for loan losses.

A portion of the compensation awarded to Citizens’ Named Executive Officers and certain other management employees for their performance in 2011 and 2012 is measured against a PTPP performance target (as defined above) as Citizens believes that PTPP is a key measurement that helps keep revenue generation as a focus for its business and a particularly valuable measure during challenging credit cycles. Based on 2011 full year results, the total cash compensation award linked to PTPP was $0.8 million. Additionally, during 2011, approximately 186,500 shares of restricted stock were granted which have a two-year vesting period based partially on PTPP results and partially on net income. Based on 2012 full year results, the total potential cash compensation award linked to PTPP is $1.3 million, payable in early 2013. The grants are designed so that a portion of the compensation is based on net income while the remainder does not depend on management’s performance with regard to managing loan losses, securities impairments, and other asset impairments.

Like all non-GAAP metrics, PTPP’s usefulness is inherently limited. Because Citizens’ calculation of PTPP may differ from the calculation of similar measures used by other bank holding companies, PTPP should be used to determine and evaluate period-to-

period trends in Citizens’ performance and in comparison to Citizens’ loan charge-offs, related credit provision, and credit writedowns, rather than in comparison to non-GAAP metrics used by other companies. In addition, investors should bear in mind that income tax expense (benefit), the provision for loan losses, and the other items excluded from revenues and expenses in the PTPP calculation are recurring and integral expenses to Citizens’ banking operations, and that these expenses will still accrue under GAAP, thereby reducing GAAP earnings and, ultimately, shareholders’ equity.

Net Interest Margin and Efficiency Ratio (non-GAAP financial measures)

In accordance with industry standards, certain designated net interest income amounts are presented on a taxable equivalent basis, including the calculation of net interest margin and the efficiency ratio. Citizens believes the presentation of net interest margin on a taxable equivalent basis using a 35% effective tax rate allows comparability of net interest margin with industry peers by eliminating the effect of the differences in portfolios attributable to the proportion represented by both taxable and tax-exempt investments. See the Selected Quarterly Information Table, the Non-GAAP Reconciliation Table, and the Average Balances, Yields and Rates Table in the attached release for additional information.

Adjusted earnings per share (non-GAAP financial measures)

Adjusted earnings per share is a non-GAAP measure as it represents net income attributable to common shareholders adjusted for the impact of the tax benefit associated with restoring the deferred tax asset. Citizens believes that the exclusion of this non-recurring item provides useful information to investors as it facilitates better period-to-period comparisons. A quantitative reconciliation of adjusted net income attributable to common shareholders to GAAP net income attributable to shareholders is provided in the attached release.

The information furnished in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 8.01. Other Events

Announced Merger with FirstMerit Corporation

On September 13, 2012, FirstMerit Corporation (NASDAQ: FMER) and Citizens Republic Bancorp, Inc. announced that they have entered into a definitive agreement under which FirstMerit will acquire Citizens in a stock-for-stock transaction. The acquisition is subject to customary closing conditions, including receipt of regulatory approvals and approval by both companies’ shareholders. Regulatory applications have been filed with the Federal Reserve and the Office of the Comptroller of the Currency. The transaction is expected to close in the second quarter of 2013. Upon completion of the transaction, the combined company would have approximately $24 billion in assets, $19 billion in deposits, and 415 branches and loan production offices in five contiguous Midwest states.

Additional Information and Where to Find It

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between FirstMerit and Citizens, FirstMerit will file with the U.S. Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of FirstMerit and Citizens that also constitutes a prospectus of FirstMerit. FirstMerit and Citizens will deliver the joint proxy statement/prospectus to their respective shareholders. FirstMerit and Citizens urge investors and shareholders to read the joint proxy statement/prospectus regarding the proposed merger when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from FirstMerit’s website (www.firstmerit.com) under the heading “Investors” and then under the heading “Publications and Filings.” You may also obtain these documents, free of charge, from Citizens’ website (www.citizensbanking.com) under the tab “Investors” and then under the heading “Financial Documents” and then under the heading “SEC Filings.”

Participants in the Merger Solicitation

FirstMerit, Citizens, and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from FirstMerit and Citizens shareholders in favor of the merger and related matters. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of FirstMerit and Citizens shareholders in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about FirstMerit’s executive officers and directors in its definitive proxy statement filed with the SEC on March 8, 2012. You can find information about Citizens’ executive officers and directors in its definitive proxy statement filed with the SEC on March 12, 2012. Additional information about FirstMerit’s executive officers and directors and Citizens’ executive officers and directors can be found in the above-referenced Registration Statement on Form S-4 when it becomes available. You can obtain free copies of these documents from FirstMerit and Citizens using the contact information above.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

Exhibit 99.1 Press Release, dated October 25, 2012.

The information furnished in this Item 9.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CITIZENS REPUBLIC BANCORP, INC.
By:	/s/ Thomas W. Gallagher
	Thomas W. Gallagher
Its:	General Counsel and Secretary

Date: October 25, 2012

Index to Exhibits

Exhibit No.	Description
Exhibit 99.1	Press Release, dated October 25, 2012.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT

Kristine D. Brenner

Director of Investor Relations

(810) 257-2506

kristine.brenner@citizensbanking.com

Citizens Republic Bancorp Reports Solid Third Quarter Results

• Net income attributable to common shareholders was $15 million or $0.37 per share for the third quarter, which includes over $4 million in pre-tax merger-related expenses

• Credit metric trends reflect continued stability and improved performance across the loan portfolio

• Pre-tax, pre-provision profit remained strong at $33 million

• Announced agreement to merge with FirstMerit Corporation in a stock-for-stock transaction

FLINT, MICHIGAN, October 25, 2012—Citizens Republic Bancorp, Inc. (Nasdaq: CRBC) announced net income attributable to common shareholders of $14.9 million or $0.37 per diluted share for the three months ended September 30, 2012, compared to $297.1 million or $7.35 per diluted share for last quarter, and $27.2 million or $0.68 per diluted share for the third quarter of last year. For the first nine months of this year, Citizens recorded net income attributable to common shareholders of $330.9 million or $8.19 per share compared to a net loss of $28.7 million or $0.73 per share for the same period of 2011. Year to date 2012 results include a $275.5 million or $6.82 per share tax benefit related to the elimination of the valuation allowance against the deferred tax asset in the second quarter.

“Last month we announced that we entered into a definitive merger agreement with FirstMerit Corporation. We are excited about the transaction which creates a unique, contiguous, Midwest franchise of significant size and scale. Until the transaction closes, we continue to successfully execute our strategic initiatives, driving our consistent earnings and organically growing our strong capital position,” commented Cathleen Nash, president and chief executive officer.

Balance Sheet

Total assets increased modestly from last quarter. Increases in the investment securities portfolio and money market investments more than offset decreases in the loan portfolio. Citizens continues to focus on C&I and consumer lending. Over the past year, growth within the C&I and indirect consumer portfolios helped to mitigate balance reductions in the commercial real estate and residential mortgage portfolios.

Total deposit balances grew slightly, as growth in low cost core deposit balances was partially offset by strategic reductions in more expensive single service and brokered time deposits. These initiatives have resulted in core deposit growth of 6% and a 23% reduction in time deposits compared to September 30, 2011.

Capital

Citizens continues to grow capital organically through earnings and maintains a strong capital position.

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Capital Ratios

	Regulatory Minimum for “Well- Capitalized”			September 30, 2012			June 30, 2012			September 30, 2011
Leverage ratio		5.00	%		9.66	%		9.77	%		8.21	%
Tier 1 capital ratio		6.00			15.09			14.70			12.81
Total capital ratio		10.00			16.35			15.96			14.14
Tier 1 common equity (non-GAAP)					8.83			8.50			6.77
Tangible equity to tangible assets (non-GAAP)					11.00			10.82			7.36
Tangible common equity to tangible assets (non-GAAP)					7.91			7.73			4.31

Net Interest Income and Margin

Net interest margin was 3.57% in the third quarter, a three basis point decrease from last quarter and a six basis point decrease from the third quarter of last year. The decreases were a result of the continued low interest rate environment and competitive pressures on our loan portfolio, partially offset by reduced funding costs. Year to date, net interest margin increased one basis point over last year to 3.58%.

Net interest income for the third quarter of 2012 was $75.8 million, consistent with last quarter and a decrease of $3.0 million from the third quarter of last year. The decrease from the third quarter of last year reflects lower net interest margin and a reduction in average earning assets. For the nine months ended September 30, 2012, net interest income decreased $7.5 million or 3% compared to the same period last year due to a reduction in average earning assets.

Credit Quality

Credit quality benefits from proactive credit management as well as returning economic stability.

• Total delinquencies decreased 3% from last quarter to $31.6 million and currently represent 0.58% of portfolio loans.

• Nonperforming assets were $86.2 million at the end of September 2012, an 8% decrease from the end of June 2012 and a decrease of 37% from September 30 of last year due to proactively managing and resolving delinquent commercial and consumer loans and improving the risk profile of the loan portfolio.

• Net charge-offs for the third quarter decreased to $19.2 million, compared to $22.2 million last quarter and $33.4 million in the third quarter of last year. The provision for loan losses was $5.2 million in the third quarter, substantially the same as the second quarter of 2012.

• The allowance for loan losses was $122.1 million or 2.25% of portfolio loans at September 30, 2012, compared to $136.1 million or 2.47% at the end of the prior quarter, and $190.4 million or 3.36% at the end of the third quarter last year.

Noninterest Income and Expense

Citizens’ focus on services and products helps support a stable base of fee income. Total noninterest income increased $1.4 million over last quarter and decreased $0.7 million compared to the third quarter last year.

• Service charges were consistent with the second quarter of 2012. Service charges on deposit accounts were down 8% compared to the third quarter of last year primarily as a result of regulatory changes.

• Brokerage and investment fees were up 38% compared to last quarter and 54% compared to the third quarter of 2011 due to focused efforts to increase accounts and sales.

• Minimal losses on loans held for sale were realized this quarter compared to gains in prior periods.

• Other income increased compared to last quarter primarily due to higher unrealized gains on deferred compensation, which was offset in noninterest expense.

Noninterest expense increased $5.7 million over last quarter and $6.6 million over the third quarter of last year, primarily due to merger-related expenses and ORE losses.

• Professional services increased compared to prior periods as a result of merger-related expenses of $4.4 million.

• Overall, credit costs remained consistent. However, losses on ORE increased $1.1 million during the quarter primarily related to a writedown on a single commercial ORE property.

• Salaries and employee benefit costs increased compared to last quarter due to higher deferred compensation expense.

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• Data processing services increased over prior periods as a negotiated reduction in expense expired.

Year to date, noninterest expense decreased $11.0 million from 2011 as lower credit costs were partially offset by higher salaries and employee benefits and merger-related expenses.

Income Taxes and Deferred Tax Asset

Citizens recorded income tax expense of $1.3 million for the third quarter of 2012, compared to a benefit of $12.6 million for the third quarter of 2011. For the first nine months of 2012, the income tax benefit totaled $275.5 million, compared with a benefit of $22.8 million for the same period of 2011. The tax benefit for the three months ended September 30, 2011 was largely due to Citizens recording a receivable as a result of a revocation of a tax election. The increase in tax benefit for the nine months ended September 30, 2012 was primarily the result of eliminating the valuation allowance against our deferred tax asset.

Conference Call

Citizens’ senior management will review the quarter’s results in a conference call at 10:00 a.m. ET on Friday, October 26, 2012. A live audio webcast is available on Citizens’ investor relations page at www.citizensbanking.com or by calling (866) 952-1906 (conference ID: Citizens Republic). To listen to the conference call, please connect approximately 10 minutes prior to the scheduled conference time. A recording will be available approximately two hours after the completion of the conference call at www.citizensbanking.com, where it will be archived for 90 days.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this release includes non-GAAP financial measures such as tangible equity to tangible assets ratio, tangible common equity to tangible assets ratio, Tier 1 common equity ratio, pre-tax pre-provision profit, net interest margin, the efficiency ratio, and adjusted earnings per share. Citizens believes these non-GAAP financial measures provide additional information that is useful to investors in understanding the underlying performance of Citizens, its business and performance trends, and such measures help facilitate performance comparisons with others in the banking industry. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their use of such measures. To mitigate these limitations, Citizens has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety to ensure that Citizens’ performance is properly reflected to facilitate consistent period-to-period comparisons. Although Citizens believes the above non-GAAP financial measures disclosed in this release enhance investors’ understanding of its business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures. See our related Form 8-K for further discussion regarding these non-GAAP financial measures.

Corporate Profile

Citizens Republic Bancorp, Inc. is a diversified financial services company providing a wide range of commercial, consumer, mortgage banking, trust and financial planning services to a broad client base. Citizens serves communities in Michigan, Ohio, and Wisconsin with 219 offices and 249 ATMs. Citizens is the largest bank holding company headquartered in Michigan with roots dating back to 1871 and is the 57^th largest bank holding company headquartered in the United States. More information about Citizens is available at www.citizensbanking.com.

Safe Harbor Statement

Discussions and statements in this release that are not statements of historical fact, including without limitation, statements that include terms such as “will,” “may,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” and “plan,” and statements regarding Citizens’ future financial and operating results, plans, objectives, expectations and intentions, are forward-looking statements that involve risks and uncertainties, many of which are beyond Citizens’ control or are subject to change. No forward-looking statement is a guarantee of future performance and actual results could differ materially.

Factors that could cause or contribute to actual results differing materially from Citizens’ expectations include the risks and uncertainties detailed from time to time in Citizens’ annual and quarterly filings with the SEC, which are available at the SEC’s website www.sec.gov. Other factors not currently anticipated

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may also materially and adversely affect Citizens’ results of operations, cash flows, financial position and prospects. There can be no assurance that future results will meet expectations. While Citizens believes that the forward-looking statements in this release are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. Citizens does not undertake, and expressly disclaims, any obligation to update or alter any statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

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Consolidated Balance Sheets (Unaudited)

Citizens Republic Bancorp, Inc.

(in thousands)	September 30, 2012			June 30, 2012			September 30, 2011
Assets
Cash and due from banks	$	162,705		$	145,432		$	147,418
Money market investments		223,818			203,861			283,018
Investment Securities:
Securities available for sale, at fair value		1,541,567			1,480,290			1,307,977
Securities held to maturity, at amortized cost (fair value of $1,378,310, $1,349,429 and $1,491,048, respectively)		1,313,504			1,296,164			1,454,873
Total investment securities		2,855,071			2,776,454			2,762,850
FHLB and Federal Reserve stock		122,123			122,123			123,696
Portfolio loans:
Commercial and industrial		1,688,996			1,711,411			1,531,492
Commercial real estate		1,335,601			1,417,409			1,643,901
Total commercial		3,024,597			3,128,820			3,175,393
Residential mortgage		570,295			588,144			654,561
Direct consumer		865,777			881,070			954,831
Indirect consumer		970,235			923,714			887,542
Total portfolio loans		5,430,904			5,521,748			5,672,327
Less: Allowance for loan losses		(122,125	)		(136,120	)		(190,354	)
Net portfolio loans		5,308,779			5,385,628			5,481,973
Loans held for sale		30,062			14,518			30,221
Premises and equipment		92,005			93,646			98,954
Goodwill		318,150			318,150			318,150
Other intangible assets		5,792			6,305			8,116
Bank owned life insurance		222,610			221,965			219,248
Other assets		383,675			382,411			126,544
Total assets	$	9,724,790		$	9,670,493		$	9,600,188
Liabilities
Noninterest-bearing deposits	$	1,854,715		$	1,796,531		$	1,621,451
Interest-bearing demand deposits		1,092,679			1,025,305			945,458
Savings deposits		2,574,642			2,607,718			2,652,267
Core deposits		5,522,036			5,429,554			5,219,176
Time deposits		1,780,929			1,858,155			2,320,728
Total deposits		7,302,965			7,287,709			7,539,904
Federal funds purchased and securities sold under agreements to repurchase		42,796			39,169			40,599
Other short-term borrowings		—			—			640
Other liabilities		168,351			154,718			154,232
Long-term debt		852,481			853,042			855,670
Total liabilities		8,366,593			8,334,638			8,591,045
Shareholders’ Equity
Preferred stock - no par value		290,580			288,723			283,360
Common stock - no par value		1,436,925			1,435,920			1,433,765
Retained deficit		(363,659	)		(378,520	)		(706,907	)
Accumulated other comprehensive loss		(5,649	)		(10,268	)		(1,075	)
Total shareholders’ equity		1,358,197			1,335,855			1,009,143
Total liabilities and shareholders’ equity	$	9,724,790		$	9,670,493		$	9,600,188

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Consolidated Statements of Operations (Unaudited)

Citizens Republic Bancorp, Inc.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2012			2011			2012			2011
Interest Income
Interest and fees on loans	$	73,376		$	77,212		$	222,205		$	235,600
Interest and dividends on investment securities:
Taxable		16,034			20,508			49,356			60,664
Tax-exempt		2,157			2,613			6,610			8,412
Dividends on FHLB and Federal Reserve stock		1,196			974			3,487			3,143
Money market investments		152			168			481			670
Total interest income		92,915			101,475			282,139			308,489
Interest Expense
Deposits		8,779			13,528			29,243			44,945
Short-term borrowings		11			20			42			57
Long-term debt		8,320			9,086			25,251			28,426
Total interest expense		17,110			22,634			54,536			73,428
Net Interest Income		75,805			78,841			227,603			235,061
Provision for loan losses		5,195			17,481			18,891			123,801
Net interest income after provision for loan losses		70,610			61,360			208,712			111,260
Noninterest Income
Service charges on deposit accounts		9,554			10,362			27,894			29,544
Trust fees		3,635			3,622			10,818			11,356
Mortgage and other loan income		2,028			2,089			5,839			6,915
Brokerage and investment fees		1,831			1,188			4,486			3,829
Card-based and other nondeposit fees		4,431			4,475			13,140			12,862
Net (losses) gains on loans held for sale		(184	)		1,952			739			2,025
Investment securities gains (losses)		—			3			—			(1,373	)
Other income		2,415			736			7,380			5,737
Total noninterest income		23,710			24,427			70,296			70,895
Noninterest Expense
Salaries and employee benefits		33,589			30,280			99,687			92,563
Occupancy		6,129			6,125			18,965			19,734
Professional services		6,806			2,394			11,294			7,020
Equipment		2,937			2,918			9,144			8,811
Data processing services		4,427			3,823			12,196			12,422
Advertising and public relations		1,847			2,179			4,890			4,550
Postage and delivery		1,157			1,142			3,375			3,378
Other loan expenses		3,121			3,941			9,574			12,510
Losses on other real estate (ORE)		941			1,210			382			11,687
ORE expenses		323			529			1,039			3,326
Intangible asset amortization		513			732			1,636			2,338
Other expense		10,265			10,138			33,312			38,172
Total noninterest expense		72,055			65,411			205,494			216,511
Income (Loss) before Income Taxes		22,265			20,376			73,514			(34,356	)
Income tax provision (benefit)		1,274			(12,568	)		(275,514	)		(22,779	)
Net Income (Loss)		20,991			32,944			349,028			(11,577	)
Dividend on redeemable preferred stock		(6,130	)		(5,761	)		(18,127	)		(17,088	)
Net Income (Loss) Attributable to Common Shareholders	$	14,861		$	27,183		$	330,901		$	(28,665	)
Net Income (Loss) Per Common Share:
Basic	$	0.37		$	0.68		$	8.19		$	(0.73	)
Diluted		0.37			0.68			8.19			(0.73	)
Average Common Shares Outstanding:
Basic		39,489			39,433			39,469			39,418
Diluted		39,489			39,433			39,469			39,418

6

Selected Quarterly Information (Unaudited)

(in thousands, except per share amounts)	Three Months Ended
	September 30, 2012			June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011
Summary of Operations
Net interest income	$	75,805		$	75,680		$	76,119		$	78,049		$	78,841
Provision for loan losses		5,195			5,299			8,397			15,007			17,481
Noninterest income		23,710			22,345			24,240			24,363			24,427
Noninterest expense		72,055			66,339			67,101			66,640			65,411
Income before income taxes		22,265			26,387			24,861			20,765			20,376
Income tax provision (benefit)(1)		1,274			(276,789	)		—			2,521			(12,568	)
Net income		20,991			303,176			24,861			18,244			32,944
Net income attributable to common shareholders (2)		14,861			297,134			18,906			12,347			27,183
Taxable equivalent adjustment		1,503			1,532			1,571			1,670			1,827
Per Common Share Data (3)
Net income:
Basic	$	0.37		$	7.35		$	0.47		$	0.31		$	0.68
Diluted		0.37			7.35			0.47			0.31			0.68
Common book value		26.36			25.85			18.83			18.24			18.03
Tangible book value (non-GAAP)		25.53			24.97			17.88			17.24			16.96
Tangible common book value (non-GAAP)		18.36			17.84			10.75			10.16			9.92
Shares outstanding, end of period (4)		40,508,823			40,504,637			40,247,241			40,260,213			40,255,758
At Period End
Assets	$	9,724,790		$	9,670,493		$	9,577,346		$	9,462,849		$	9,600,188
Earning assets		8,600,731			8,588,343			8,774,119			8,680,995			8,824,183
Portfolio loans		5,430,904			5,521,748			5,528,063			5,529,535			5,672,327
Allowance for loan losses		122,125			136,120			153,007			172,726			190,354
Deposits		7,302,965			7,287,709			7,490,362			7,394,941			7,539,904
Long-term debt		852,481			853,042			853,599			854,185			855,670
Shareholders’ equity		1,358,197			1,335,855			1,044,619			1,019,537			1,009,143
Average for the Quarter
Assets	$	9,723,587		$	9,429,050		$	9,521,386		$	9,523,184		$	9,596,275
Earning assets		8,638,390			8,622,067			8,750,078			8,761,435			8,856,072
Portfolio loans		5,501,400			5,517,726			5,508,528			5,632,432			5,663,058
Allowance for loan losses		135,968			152,154			172,509			190,163			206,119
Deposits		7,323,753			7,317,653			7,441,693			7,452,137			7,546,615
Long-term debt		852,776			853,333			853,912			856,206			862,479
Shareholders’ equity		1,345,817			1,061,519			1,028,494			1,017,082			991,602
Financial Ratios (annualized)
Return on average assets		0.86	%		12.93	%		1.05	%		0.76	%		1.36	%
Return on average shareholders’ equity		6.20			114.87			9.72			7.12			13.18
Average shareholders’ equity / average assets		13.84			11.26			10.80			10.68			10.33
Net interest margin (FTE) (5)		3.57			3.60			3.56			3.62			3.63
Efficiency ratio (non-GAAP)(6)		65.20			65.99			65.20			61.39			59.89
Allowance for loan losses as a percent of portfolio loans		2.25			2.47			2.77			3.12			3.36
Allowance for loan losses as a percent of nonperforming loans(7)		191.29			161.53			202.56			197.56			190.09
Allowance for loan losses as a percent of nonperforming assets(7)		141.69			144.85			168.87			168.97			139.01
Nonperforming loans as a percent of portfolio loans(7)		1.18			1.53			1.37			1.58			1.77
Nonperforming assets as a percent of total loans plus ORAA(7)(8)		1.58			1.69			1.63			1.84			2.39
Nonperforming assets as a percent of total assets(7)		0.89			0.97			0.95			1.08			1.43
Ratio of net charge-offs during period to average portfolio loans		1.39			1.62			2.05			2.30			2.34
Leverage ratio		9.66			9.77			8.71			8.45			8.21
Tier 1 capital ratio		15.09			14.70			13.70			13.51			12.81
Total capital ratio		16.35			15.96			14.97			14.84			14.14

⁽¹⁾ Second quarter 2012 benefit is directly related to the restoration of the deferred tax asset.

⁽²⁾  Net income attributable to common shareholders includes a non-cash dividend to preferred shareholders of $6.0 million in the third, second, and first quarters of 2012 and $5.9 million, and $5.8 million in the fourth, and third quarters of 2011.

⁽³⁾  Earnings per share in the second quarter of 2012 includes a tax benefit of $6.85 per share related to restoring the deferred tax asset.

⁽⁴⁾ Includes participating shares which are restricted stock units and restricted shares.

⁽⁵⁾  Net interest margin is presented on an annual basis, includes taxable equivalent adjustments to interest income and is based on a tax rate of 35%.

⁽⁶⁾  Efficiency ratio (non-GAAP) is calculated as follows: (Noninterest expense-Losses on other real estate ("ORE")-ORE expenses-Intangible amortization-Merger related expenses)/(Net interest income+Taxable equivalent adjustment+Total noninterst income-Investment securities gains(losses)).

⁽⁷⁾  Nonperforming loans/assets exclude troubled debt restructurings (TDRs) that are on an accrual status and performing in accordance with their modified terms.

⁽⁸⁾  Other real estate assets acquired (ORAA) include loans held for sale.

7

Loan Portfolios

(in thousands)	September 30, 2012		June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011
Land hold	$	4,984	$	5,119	$	5,387	$	6,542	$	6,818
Land development		7,521		7,006		7,226		13,104		22,232
Construction		6,689		4,591		6,410		5,847		5,410
Income producing		767,202		803,546		877,461		913,755		975,262
Owner-occupied		549,205		597,147		590,575		605,113		634,179
Total commercial real estate		1,335,601		1,417,409		1,487,059		1,544,361		1,643,901
Commercial and industrial		1,688,996		1,711,411		1,657,140		1,543,529		1,531,492
Total commercial		3,024,597		3,128,820		3,144,199		3,087,890		3,175,393
Residential mortgage		570,295		588,144		611,166		637,245		654,561
Direct consumer		865,777		881,070		903,238		933,314		954,831
Indirect consumer		970,235		923,714		869,460		871,086		887,542
Total consumer		2,406,307		2,392,928		2,383,864		2,441,645		2,496,934
Total portfolio loans	$	5,430,904	$	5,521,748	$	5,528,063	$	5,529,535	$	5,672,327

Delinquency Rates By Loan Portfolio

	September 30, 2012					June 30, 2012					March 31, 2012					December 31, 2011					September 30, 2011
30 to 89 days past due (in thousands)	$		% of Portfolio			$		% of Portfolio			$		% of Portfolio			$		% of Portfolio			$		% of Portfolio
Land hold	$	—		—	%	$	—		—	%	$	—		—	%	$	21		0.32	%	$	—		—	%
Land development		—		—			—		—			130		1.81			—		—			216		0.97
Construction		—		—			—		—			—		—			—		—			—		—
Income producing		1,104		0.14			1,519		0.19			1,447		0.16			2,508		0.27			3,325		0.34
Owner-occupied		4,598		0.84			936		0.16			5,177		0.88			2,345		0.39			5,817		0.92
Total commercial real estate		5,702		0.43			2,455		0.17			6,754		0.45			4,874		0.32			9,358		0.57
Commercial and industrial		880		0.05			1,565		0.09			2,887		0.17			2,454		0.16			2,594		0.17
Total commercial		6,582		0.22			4,020		0.13			9,641		0.31			7,328		0.24			11,952		0.38
Residential mortgage		6,029		1.06			7,731		1.31			7,568		1.24			9,544		1.50			9,079		1.39
Direct consumer		11,435		1.32			12,396		1.41			14,002		1.55			17,810		1.91			18,629		1.95
Indirect consumer		7,514		0.77			8,504		0.92			8,780		1.01			13,067		1.50			9,898		1.12
Total consumer		24,978		1.04			28,631		1.20			30,350		1.27			40,421		1.66			37,606		1.51
Total delinquent loans	$	31,560		0.58		$	32,651		0.59		$	39,991		0.72		$	47,749		0.86		$	49,558		0.87

8

Nonperforming Assets

	September 30, 2012						June 30, 2012						March 31, 2012						December 31, 2011						September 30, 2011
(in thousands)	$			% of Portfolio			$			% of Portfolio			$			% of Portfolio			$			% of Portfolio			$			% of Portfolio
Land hold	$	326			6.54	%	$	326			6.37	%	$	—			—	%	$	—			—	%	$	167			2.45	%
Land development		3			0.04			3			0.05			207			2.87			213			1.62			12			0.05
Construction		—			—			—			—			150			2.34			150			2.57			257			4.76
Income producing		12,904			1.68			19,408			2.42			18,566			2.12			21,171			2.32			23,227			2.38
Owner-occupied		13,146			2.39			18,187			3.05			20,716			3.51			23,798			3.93			27,540			4.34
Total commercial real estate		26,379			1.98			37,924			2.68			39,639			2.67			45,332			2.94			51,203			3.11
Commercial and industrial		9,190			0.54			21,676			1.27			14,629			0.88			16,946			1.10			18,536			1.21
Total nonaccruing commercial		35,569			1.18			59,600			1.90			54,268			1.73			62,278			2.02			69,739			2.20
Residential mortgage		15,271			2.68			13,474			2.29			11,137			1.82			11,312			1.78			13,074			2.00
Direct consumer		10,552			1.22			9,263			1.05			8,895			0.98			12,115			1.30			14,704			1.54
Indirect consumer		2,391			0.25			1,875			0.20			1,074			0.12			953			0.11			1,256			0.14
Total nonaccruing consumer		28,214			1.17			24,612			1.03			21,106			0.89			24,380			1.00			29,034			1.16
Total nonaccruing loans		63,783			1.17			84,212			1.53			75,374			1.37			86,658			1.57			98,773			1.74
Loans 90+ days still accruing		60			—			59			—			164			—			770			0.01			1,368			0.02
Total nonperforming portfolio loans		63,843			1.18			84,271			1.53			75,538			1.37			87,428			1.58			100,141			1.77
Nonperforming held for sale		16,650						887						3,264						2,372						20,134
Other repossessed assets acquired		5,700						8,817						11,803						12,422						16,665
Total nonperforming assets	$	86,193					$	93,975					$	90,605					$	102,222					$	136,940
Restructured loans still accruing	$	21,433					$	18,187					$	17,911					$	32,347					$	12,206
Commercial inflows	$	4,572					$	23,828					$	14,027					$	13,269					$	23,901
Commercial outflows		(28,603	)					(18,496	)					(22,037	)					(20,730	)					(17,611	)
Net change	$	(24,031	)				$	5,332					$	(8,010	)				$	(7,461	)				$	6,290

Net Charge-Offs

	Three Months Ended
	September 30, 2012						June 30, 2012						March 31, 2012						December 31, 2011						September 30, 2011
(in thousands)	$			% of Portfolio*			$			% of Portfolio*			$			% of Portfolio*			$			% of Portfolio*			$			% of Portfolio*
Land hold	$	—			—	%	$	(58	)		(4.58	)%	$	—			—	%	$	(33	)		(2.00	)%	$	—			—	%
Land development		(8	)		(0.45	)		100			5.76			(83	)		(4.64	)		3,079			93.21			43			0.76
Construction		(21	)		(1.24	)		14			1.24			(101	)		(6.33	)		(4	)		(0.24	)		(5	)		(0.34	)
Income producing		2,582			1.34			3,100			1.55			4,151			1.90			11,924			5.18			3,156			1.28
Owner-occupied		1,891			1.37			2,384			1.61			2,537			1.73			5,791			3.80			2,129			1.33
Total commercial real estate		4,444			1.32			5,540			1.57			6,504			1.76			20,757			5.33			5,323			1.28
Commercial and industrial		5,363			1.26			5,249			1.23			3,029			0.74			1,032			0.27			1,225			0.32
Total commercial		9,807			1.29			10,789			1.39			9,533			1.22			21,789			2.80			6,548			0.82
Residential mortgage		2,515			1.75			3,506			2.40			5,076			3.34			1,170			0.73			18,364			11.13
Direct consumer		4,790			2.20			5,666			2.59			10,935			4.87			6,930			2.95			5,710			2.37
Indirect consumer		2,078			0.85			2,225			0.97			2,572			1.19			2,746			1.25			2,797			1.25
Total consumer		9,383			1.55			11,397			1.92			18,583			3.14			10,846			1.76			26,871			4.27
Total net charge-offs	$	19,190			1.39		$	22,186			1.62		$	28,116			2.05		$	32,635			2.30		$	33,419			2.34

* Represents an annualized rate.

9

Summary of Loan Loss Experience

(in thousands)	Three Months Ended
	September 30, 2012		June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011
Allowance for loan losses—beginning of period	$	136,120	$	153,007	$	172,726	$	190,354	$	206,292
Provision for loan losses		5,195		5,299		8,397		15,007		17,481
Charge-offs:
Commercial and industrial		4,552		3,667		2,388		1,489		994
Small business		1,039		2,271		1,265		399		1,132
Commercial real estate		5,452		8,093		8,997		21,581		5,860
Total commercial		11,043		14,031		12,650		23,470		7,986
Residential mortgage		3,261		3,972		5,210		1,366		18,369
Direct consumer		6,067		7,168		11,527		7,544		6,398
Indirect consumer		3,172		3,157		3,251		3,229		3,430
Total charge-offs		23,543		28,328		32,638		35,609		36,183
Recoveries:
Commercial and industrial		108		577		376		609		721
Small business		120		112		248		248		180
Commercial real estate		1,008		2,553		2,493		824		537
Total commercial		1,236		3,242		3,117		1,681		1,438
Residential mortgage		746		466		134		197		5
Direct consumer		1,277		1,502		592		613		688
Indirect consumer		1,094		932		679		483		633
Total recoveries		4,353		6,142		4,522		2,974		2,764
Net charge-offs		19,190		22,186		28,116		32,635		33,419
Allowance for loan losses—end of period	$	122,125	$	136,120	$	153,007	$	172,726	$	190,354

10

Non-GAAP Reconciliation

	September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)	2012			2012			2012			2011			2011
Efficiency Ratio (non-GAAP)
Net interest income (A)	$	75,805		$	75,680		$	76,119		$	78,049		$	78,841
Taxable equivalent adjustment (B)		1,503			1,532			1,571			1,670			1,827
Investment securities gains (losses) (C)		—			—			—			38			3
Noninterest income (D)		23,710			22,345			24,240			24,363			24,427
Noninterest expense (E)		72,055			66,339			67,101			66,640			65,411
(Gains) losses on ORE and ORE expenses (F)		1,264			93			65			2,076			1,739
Intangible amortization (G)		513			545			578			688			732
Merger-related expenses (H)		4,411			—			—			—			—
Efficiency ratio: (E-F-G-H)/(A+B-C+D) (non-GAAP)		65.20	%		65.99	%		65.20	%		61.39	%		59.89	%
Tangible Common Equity to Tangible Assets (non-GAAP)
Total assets	$	9,724,790		$	9,670,493		$	9,577,346		$	9,462,849		$	9,600,188
Goodwill		(318,150	)		(318,150	)		(318,150	)		(318,150	)		(318,150	)
Other intangible assets		(5,792	)		(6,305	)		(6,850	)		(7,428	)		(8,116	)
Tangible assets (non-GAAP)	$	9,400,848		$	9,346,038		$	9,252,346		$	9,137,271		$	9,273,922
Total shareholders’ equity	$	1,358,197		$	1,335,855		$	1,044,619		$	1,019,537		$	1,009,143
Goodwill		(318,150	)		(318,150	)		(318,150	)		(318,150	)		(318,150	)
Other intangible assets		(5,792	)		(6,305	)		(6,850	)		(7,428	)		(8,116	)
Tangible equity (non-GAAP)	$	1,034,255		$	1,011,400		$	719,619		$	693,959		$	682,877
Tangible equity	$	1,034,255		$	1,011,400		$	719,619		$	693,959		$	682,877
Preferred stock		(290,580	)		(288,723	)		(286,901	)		(285,114	)		(283,360	)
Tangible common equity (non-GAAP)	$	743,675		$	722,677		$	432,718		$	408,845		$	399,517
Tier 1 Common Equity (non-GAAP)
Total shareholders' equity	$	1,358,197		$	1,335,855		$	1,044,619		$	1,019,537		$	1,009,143
Qualifying capital securities		73,667			73,667			73,667			73,667			73,667
Goodwill		(318,150	)		(318,150	)		(318,150	)		(318,150	)		(318,150	)
Accumulated other comprehensive loss		5,649			10,268			1,955			5,820			1,075
Disallowed deferred tax asset		(235,461	)		(235,529	)		—			—			—
Other intangible assets		(5,792	)		(6,305	)		(6,850	)		(7,428	)		(8,116	)
Tier 1 capital (regulatory)	$	878,110		$	859,806		$	795,241		$	773,446		$	757,619
Tier 1 capital (regulatory)	$	878,110		$	859,806		$	795,241		$	773,446		$	757,619
Qualifying capital securities		(73,667	)		(73,667	)		(73,667	)		(73,667	)		(73,667	)
Preferred stock		(290,580	)		(288,723	)		(286,901	)		(285,114	)		(283,360	)
Total Tier 1 common equity (non-GAAP)	$	513,863		$	497,416		$	434,673		$	414,665		$	400,592
Net risk-weighted assets (regulatory)	$	5,821,748		$	5,851,871		$	5,803,811		$	5,723,333		$	5,912,527
Equity to assets		13.97	%		13.81	%		10.91	%		10.77	%		10.51	%
Tier 1 common equity (non-GAAP)		8.83			8.50			7.49			7.24			6.77
Tangible equity to tangible assets (non-GAAP)		11.00			10.82			7.78			7.59			7.36
Tangible common equity to tangible assets (non-GAAP)		7.91			7.73			4.68			4.47			4.31

11

Non-GAAP Reconciliation

Adjusted earnings per share

	Nine Months Ended September 30,
(in thousands, except per share amounts)	2012			2011
Earnings per Share
Diluted net income (loss) per share	$	8.19		$	(0.73	)
Restoration of the deferred tax asset		6.82			—
Diluted net income (loss) per share (non-GAAP)	$	1.37		$	(0.73	)
An itemized reconciliation between net income on a GAAP basis and net income excluding the benefit of restoring the deferred tax asset (non-GAAP) follows:
Numerator:
Net income (loss)	$	349,028		$	(11,577	)
Restoration of the deferred tax asset		(275,484	)		—
Net income (loss) (non-GAAP)		73,544			(11,577	)
Dividend on redeemable preferred stock		(18,127	)		(17,088	)
Net income (loss) attributable to common shareholders (non-GAAP)		55,417			(28,665	)
Net income allocated to participating securities		1,268			—
Net income (loss) after allocation to participating securities (non-GAAP)	$	54,149		$	(28,665	)
Denominator:
Weighted average shares outstanding for basic and dilutive earnings per common share		39,469			39,418
Basic net income (loss) per common share (non-GAAP)	$	1.37		$	(0.73	)
Diluted net income (loss) per common share (non-GAAP)		1.37			(0.73	)

Pre-tax pre-provision profit (non-GAAP)

	Three Months Ended
(in thousands)	September 30, 2012			June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011
Net income	$	20,991		$	303,176		$	24,861		$	18,244		$	32,944
Income tax provision (benefit)		1,274			(276,789	)		—			2,521			(12,568	)
Provision for loan losses		5,195			5,299			8,397			15,007			17,481
Net losses (gains) on loans held for sale		184			(6	)		(916	)		217			(1,952	)
Investment securities (gains) losses		—			—			—			(38	)		(3	)
Losses (gains) on other real estate (ORE)		941			(173	)		(385	)		1,081			1,210
Merger-related expenses(1)		4,411			—			—			—			—
Fair-value adjustment on bank owned life insurance(2)		(31	)		118			(205	)		(100	)		385
Fair-value adjustment on swaps (2)		83			74			(61	)		(46	)		268
Pre-tax pre-provision profit (non-GAAP)	$	33,048		$	31,699		$	31,691		$	36,886		$	37,765

⁽¹⁾  Merger-related expenses are contained in line item “Professional services” on Consolidated Statements of Operations.

⁽²⁾  Fair-value adjustment amounts contained in line item “Other income” on Consolidated Statements of Operations.

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Noninterest Income and Noninterest Expense

(in thousands)	Three Months Ended
	September 30, 2012			June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011
Service charges on deposit accounts	$	9,554		$	9,355		$	8,985		$	9,724		$	10,362
Trust fees		3,635			3,582			3,602			3,747			3,622
Mortgage and other loan income		2,028			1,952			1,858			2,705			2,089
Brokerage and investment fees		1,831			1,331			1,324			1,243			1,188
Card-based and other nondeposit fees		4,431			4,444			4,265			4,305			4,475
Gains (losses) on loans held for sale		(184	)		6			916			(217	)		1,952
Investment securities gains		—			—			—			38			3
Other income		2,415			1,675			3,290			2,818			736
Total noninterest income	$	23,710		$	22,345		$	24,240		$	24,363		$	24,427
Salaries and employee benefits	$	33,589		$	32,801		$	33,298		$	30,952		$	30,280
Occupancy		6,129			6,140			6,696			6,326			6,125
Professional services(1)		6,806			2,465			2,023			2,311			2,394
Equipment		2,937			2,904			3,303			3,326			2,918
Data processing services		4,427			3,721			4,048			3,709			3,823
Advertising and public relations		1,847			1,708			1,335			1,298			2,179
Postage and delivery		1,157			1,119			1,099			1,165			1,142
Other loan expenses		3,121			3,266			3,186			3,497			3,941
Losses (gains) on other real estate (ORE)		941			(173	)		(385	)		1,081			1,210
ORE expenses		323			266			450			995			529
Intangible asset amortization		513			545			578			688			732
Other expense		10,265			11,577			11,470			11,292			10,138
Total noninterest expense	$	72,055		$	66,339		$	67,101		$	66,640		$	65,411

⁽¹⁾ Includes merger-related expenses of $4.4 million in the three months ended September 30, 2012.

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Average Balances, Yields and Rates

							Three Months Ended
	September 30, 2012						June 30, 2012						September 30, 2011
(in thousands)	Average Balance			Average Rate			Average Balance			Average Rate			Average Balance			Average Rate
Earning Assets
Money market investments	$	238,492			0.25	%	$	184,670			0.25	%	$	270,422			0.25	%
Investment securities:
Taxable		2,557,793			2.51			2,577,646			2.48			2,536,944			3.23
Tax-exempt		205,572			6.46			209,421			6.46			242,494			6.63
FHLB and Federal Reserve stock		122,123			3.90			119,413			3.87			123,906			3.13
Portfolio loans:
Commercial and industrial		1,713,382			5.42			1,665,640			5.45			1,440,968			5.24
Commercial real estate		1,382,873			4.81			1,465,135			5.04			1,678,996			5.07
Residential mortgage		580,002			4.36			601,439			4.36			693,494			4.45
Direct consumer		873,057			5.81			890,957			5.88			967,443			6.00
Indirect consumer		952,086			6.05			894,555			6.15			882,157			6.56
Total portfolio loans		5,501,400			5.33			5,517,726			5.40			5,663,058			5.43
Loans held for sale		13,010			3.40			13,191			3.40			19,248			4.44
Total earning assets		8,638,390			4.36			8,622,067			4.42			8,856,072			4.64
Nonearning Assets
Cash and due from banks		145,961						141,122						147,044
Premises and equipment		92,775						94,836						99,835
Investment security fair value adjustment		54,807						53,672						46,558
Other nonearning assets		927,622						669,507						652,885
Allowance for loan losses		(135,968	)					(152,154	)					(206,119	)
Total assets	$	9,723,587					$	9,429,050					$	9,596,275
Interest-Bearing Liabilities
Deposits:
Interest-bearing demand deposits	$	1,073,294			0.13		$	988,884			0.14		$	976,637			0.21
Savings deposits		2,602,216			0.20			2,677,524			0.23			2,648,640			0.33
Time deposits		1,825,144			1.55			1,916,294			1.57			2,380,333			1.80
Short-term borrowings		45,974			0.10			37,148			0.13			43,445			0.18
Long-term debt		852,776			3.89			853,333			3.94			862,479			4.19
Total interest-bearing liabilities		6,399,404			1.06			6,473,183			1.10			6,911,534			1.30
Noninterest-Bearing Liabilities and Shareholders’ Equity
Noninterest-bearing demand		1,823,099						1,734,951						1,541,005
Other liabilities		155,267						159,397						152,134
Shareholders’ equity		1,345,817						1,061,519						991,602
Total liabilities and shareholders’ equity	$	9,723,587					$	9,429,050					$	9,596,275
Interest Spread					3.29	%					3.32	%					3.34	%
Contribution of noninterest bearing sources of funds					0.28						0.28						0.29
Net Interest Margin					3.57	%					3.60	%					3.63	%

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Average Balances, Yields and Rates

	Nine Months Ended
	September 30,
	2012						2011
	Average			Average			Average			Average
(in thousands)	Balance			Rate			Balance			Rate
Earning Assets
Money market investments	$	257,535			0.25	%	$	362,983			0.25	%
Investment securities:
Taxable		2,561,262			2.57			2,432,220			3.33
Tax-exempt		210,096			6.45			258,524			6.67
FHLB and Federal Reserve stock		119,834			3.88			134,998			3.11
Portfolio loans:
Commercial and industrial		1,651,213			5.49			1,404,081			5.07
Commercial real estate		1,456,217			4.97			1,828,800			5.14
Residential mortgage		602,970			4.35			718,039			4.68
Direct consumer		894,603			5.86			994,185			6.06
Indirect consumer		904,188			6.20			847,878			6.68
Total portfolio loans		5,509,191			5.40			5,792,983			5.44
Loans held for sale		12,145			3.72			26,739			3.65
Total earning assets		8,670,063			4.42			9,008,447			4.66
Nonearning Assets
Cash and due from banks		143,373						143,254
Premises and equipment		94,858						101,846
Investment security fair value adjustment		52,778						44,256
Other nonearning assets		751,020						662,565
Allowance for loan losses		(153,480	)					(241,431	)
Total assets	$	9,558,612					$	9,718,937
Interest-Bearing Liabilities
Deposits:
Interest-bearing demand deposits	$	1,012,171			0.15		$	958,634			0.22
Savings deposits		2,662,533			0.24			2,633,255			0.37
Time deposits		1,956,304			1.60			2,564,001			1.88
Short-term borrowings		40,621			0.14			41,999			0.18
Long-term debt		853,339			3.95			912,755			4.16
Total interest-bearing liabilities		6,524,968			1.12			7,110,644			1.38
Noninterest-Bearing Liabilities and Shareholders’ Equity
Noninterest-bearing demand		1,729,889						1,470,866
Other liabilities		157,746						151,525
Shareholders’ equity		1,146,009						985,902
Total liabilities and shareholders’ equity	$	9,558,612					$	9,718,937
Interest Spread					3.30	%					3.28	%
Contribution of noninterest bearing sources of funds					0.28						0.29
Net Interest Margin					3.58	%					3.57	%

15