10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0 - 25980

First Citizens Banc Corp

(Exact name of registrant as specified in its charter)

Ohio	34-1558688
State or other jurisdiction of	(IRS Employer
incorporation or organization	Identification No.)

100 East Water Street, Sandusky, Ohio	44870
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	(419) 625 — 4121

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common shares, no par value	The NASDAQ Stock Market LLC (NASDAQ Capital Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o      No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o      No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ      No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o  Accelerated filer þ  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller reporting company o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o      No þ

The aggregate market value of the voting and non voting common equity stock held by non-affiliates of the registrant based upon the closing market price as of June 30, 2008 was $80,476,797. For this purpose, shares held by non-affiliates are all outstanding shares except those held by the directors and executive officers of the registrant.

As of February 28, 2009, there were 7,707,917 shares of no par value common shares issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Annual Report to Shareholders for fiscal year ended December 31, 2008 are incorporated by reference into Parts I, II and IV of this Form 10-K. Portions of the registrant’s Proxy Statement, pursuant to Regulation 14A of the Securities Exchange Act for the registrant’s 2009 annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

INDEX

Part I
Item 1. Business	4
Item 1(A). Risk Factors	19
Item 1(B) . Unresolved Staff Comments	23
Item 2. Properties	23
Item 3. Legal Proceedings	23
Item 4. Submission of Matters to a Vote of Security Holders	23
Part II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	23
Item 6. Selected Financial Data	24
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation	24
Item 7(A). Quantitative and Qualitative Disclosures About Market Risk	24
Item 8. Financial Statements and Supplementary Data	24
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9(A). Controls and Procedures	25
Item 9(B). Other Information	25
Part III
Item 10. Directors, Executive Officers and Corporate Governance	25
Item 11. Executive Compensation	26
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	26
Item 13. Certain Relationships and Related Transactions, and Director Independence	26
Item 14. Principal Accountant Fees and Services	26
Part IV
Item 15. Exhibits, Financial Statement Schedules	27
Signatures	31
EX-3.1(B)
EX-3.2
EX-4.3
EX-13.1
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I

Item 1. Business

(a)	General Development of Business
	FIRST CITIZENS BANC CORP (FCBC) was organized under the laws of the State of Ohio on February 19, 1987 and is a registered financial holding company under the Gramm-Leach-Bliley Act of 1999, as amended. The FCBC’s office is located at 100 East Water Street, Sandusky, Ohio. The Corporation had total consolidated assets of $1,053,611 at December 31, 2008. FCBC and its subsidiaries are referred to together as the Corporation. In addition to the subsidiaries listed below, FCBC also has five wholly owned special purpose entities that are accounted for using the equity method based on their nature and purpose.
	THE CITIZENS BANKING COMPANY (Citizens), owned by the FCBC since 1987, opened for business in 1884 as The Citizens National Bank. In 1898, Citizens was reorganized under Ohio banking law and was known as The Citizens Bank and Trust Company. In 1908, Citizens surrendered its trust charter and began operation under its current name. Citizens is an insured bank under the Federal Deposit Insurance Act. In the third quarter of 2006, Mr. Money Finance Company (Mr. Money), a wholly-owned subsidiary of Citizens, was merged with and into Citizens. Citizens maintains its main office at 100 East Water Street, Sandusky, Ohio and operates branch banking offices in the following Ohio communities: Sandusky (2), Norwalk (2), Berlin Heights, Huron, Castalia, New Washington, Shelby (3), Willard, Crestline, Chatfield, Tiro, Greenwich, Plymouth, Shiloh, Akron, Dublin, Hilliard, Plain City, Russells Point, Urbana (2) , West Liberty and Quincy. Additionally, Citizens operates a loan production office in Port Clinton, Ohio. During the third quarter 2008, the Corporation closed its loan production offices in Marion, Ohio and Marysville, Ohio. Citizens accounts for 99.8% of the Corporation’s consolidated assets at December 31, 2008.
	On October 8, 2004, FCBC acquired FNB Financial Corporation (FNB) and its subsidiary, The First National Bank of Shelby (Shelby) through the merger of FNB into FCBC and the merger of Shelby into FCBC’s wholly-owned subsidiary, First Citizens Bank (formerly known as The Farmers State Bank), which was subsequently merged into Citizens in October 2005. The FNB acquisition increased FCBC’s assets by $196.7 million and number of branches by eight.
	In October 2007, Citizens acquired the deposits of Miami Valley Bank and its two branches located in Lakeview and Quincy, Ohio. On December 17, 2007, FCBC acquired Futura Banc Corp (Futura) and its subsidiary, Champaign National Bank (Champaign National) through the merger of Futura into FCBC and the merger of Champaign National into Citizens. The Futura acquisition increased FCBC’s assets by $276.3 million and number of branches by nine.
	SCC RESOURCES INC. (SCC) was organized under the laws of the State of Ohio. SCC began as a joint venture of three local Sandusky, Ohio banks in 1966. SCC provides item-processing services for financial institutions, including Citizens, and other nonrelated entities. The Corporation acquired total ownership of SCC in February 1993. This subsidiary accounts for less than one percent of the Corporation’s consolidated assets as of December 31, 2008. FIRST CITIZENS INSURANCE AGENCY, INC. (Insurance Agency) was formed in 2001 to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Assets of the Insurance Agency are not significant as of December 31, 2008.
	WATER STREET PROPERTIES (Water St.) was formed in 2003 to hold properties repossessed by FCBC subsidiaries. Assets of Water St. are not significant as of December 31, 2008.

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CHAMPAIGN INVESTMENT COMPANY (CIC) was acquired in 2007 via the Futura acquisition and is licensed as a fully disclosed broker and dealer in securities. The Corporation dissolved this entity on December 19, 2008.

FIRST CITIZENS INVESTMENTS, INC. (FCI) was formed in the fourth quarter of 2007 as a wholly-owned subsidiary of Citizens to hold and manage its securities portfolio. The operations of FCI are located in Wilmington, Delaware.

FIRST CITIZENS CAPITAL LLC (FCC) was also formed in the fourth quarter of 2007 as a wholly-owned subsidiary of Citizens to hold inter-company debt that is eliminated in consolidation. The operations of FCC are located in Wilmington, Delaware.

(b)	Financial Information About Industry Segments
	FCBC is a financial holding company. Through the subsidiary bank, the Corporation is primarily engaged in the business of community banking, which accounts for substantially all of its revenue, operating income and assets. Financial information regarding the Corporation is included herein under Items 7 and 8 of this Form 10-K and statistical information regarding the Corporation is located under Item 1 of this Form 10-K, and each is incorporated into this Section by reference.
(c)	Narrative Description of Business
	General
	The Corporation’s primary business is incidental to the subsidiary bank. Citizens, located in Erie, Crawford, Champaign, Franklin, Logan, Summit, Huron, Ottawa, and Richland Counties, Ohio, conducts a general banking business that involves collecting customer deposits, making loans, purchasing securities, and offering Trust services.
	Interest and fees on loans accounted for 75% of total revenue for 2008, 77% of total revenue for 2007, and 77% of total revenue in 2006. The Corporation’s primary focus of lending continues to be real estate loans, both residential and commercial in nature. Residential real estate mortgages comprised 41% of the total loan portfolio in 2008, 43% of the total loan portfolio in 2007, and 42% of the total loan portfolio in 2006. Commercial real estate loans comprised 39% of the total loan portfolio in 2008, 38% in 2007, and 39% in 2006. Commercial and agricultural loans comprised 14% of the total loan portfolio in 2008, 12% in 2007 and 10% in 2006. Citizens’ loan portfolio does not include any foreign-based loans, loans to lesser-developed countries or loans to FCBC.
	On a parent company only basis, FCBC’s primary source of funds is the receipt of dividends paid by its subsidiaries, principally Citizens. The ability of the subsidiary bank to pay dividends is subject to limitations under various laws and regulations and to prudent and sound banking principles. Generally, subject to certain minimum capital requirements, the subsidiary bank may declare a dividend without the approval of the State of Ohio Division of Financial Institutions unless the total of the dividends in a calendar year exceeds the total net profits of the bank for the year combined with the retained profits of the bank for the two preceding years. At December 31, 2008, Citizens is restricted from paying dividends to the Corporation without obtaining regulatory approval. Earnings have been sufficient to support asset growth at the subsidiary bank and at the same time provide funds to FCBC for shareholder dividends.
	The Corporation’s business is not seasonal, nor is it dependent on a single or small group of customers.
	In the opinion of management, the Corporation does not have exposure to material costs associated with environmental hazardous waste cleanup.

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Competition

The market area for Citizens is Erie, Crawford, Champaign, Franklin, Logan, Summit, Huron, Ottawa, and Richland Counties in Ohio. Traditional financial service competition for Citizens consists of large regional financial institutions, community banks, thrifts and credit unions operating within the Corporation’s market area. Nontraditional sources of competition for loan and deposit dollars come from captive auto finance companies, mortgage banking companies, internet banks, brokerage companies, insurance companies and direct mutual funds.

Employees

FCBC has no employees. The subsidiary companies employ approximately 300 full-time equivalent employees to whom a variety of benefits are provided. FCBC and its subsidiaries are not parties to any collective bargaining agreements. Management considers its relationship with its employees to be good.

Supervision and Regulation

The Bank Holding Company Act. As a financial holding company, FCBC is subject to regulation under the Bank Holding Company Act of 1956, as amended (the BHCA) and the examination and reporting requirements of the Board of Governors of the Federal Reserve System (Federal Reserve Board). Under the BHCA, FCBC is subject to periodic examination by the Federal Reserve Board and required to file periodic reports regarding its operations and any additional information that the Federal Reserve Board may require. A bank holding company is required by law to guarantee the compliance of any insured depository institution subsidiary that may become “undercapitalized” (defined in the regulations as not meeting minimum capital requirements) with the terms of the capital restoration plan filed by such subsidiary with its appropriate federal banking agency.

The BHCA generally limits the activities of a bank holding company to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries and engaging in any other activities that the Federal Reserve Board has determined to be so closely related to banking or to managing or controlling banks as to be a proper incident to those activities. In addition, the BHCA requires every bank holding company to obtain the approval of the Federal Reserve Board prior to acquiring substantially all the assets of any bank, acquiring direct or indirect ownership or control of more than 5% of the voting shares of a bank or merging or consolidating with another bank holding company.

The Financial Services Modernization Act of 1999 permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. A bank holding company may become a financial holding company if each of its subsidiary banks is well capitalized under the Federal Deposit Insurance Corporation Act of 1991 prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act, by filing a declaration that the bank holding company wishes to become a financial holding company. In March, 2000, FCBC became a financial holding company. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or a savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board.

The Financial Services Modernization Act defines “financial in nature” to include:

• securities underwriting, dealing and market making;

• sponsoring mutual funds and investment companies;

• insurance underwriting and agency;

• merchant banking; and

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• activities that the Federal Reserve Board has determined to be closely related to banking.

Transactions between FCBC and Citizens are subject to statutory limits in Sections 23A and 23B of the Federal Reserve Act, which limit the amounts of such transactions and require that the terms of the transactions be at least as favorable to Citizens as the terms would be of a similar transaction between Citizens and an unrelated party. FCBC and Citizens were in compliance with these requirements and restrictions at December 31, 2008.

Privacy Provisions of Gramm-Leach-Bliley Act. Under the Gramm-Leach-Bliley Act, federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. These rules contain extensive provisions on a customer’s right to privacy of non-public personal information. Except in certain cases, an institution may not provide personal information to unaffiliated third parties unless the institution discloses that such information may be disclosed and the customer is given the opportunity to opt out of such disclosure. The privacy provisions of the GLB Act affect how consumer information is conveyed to outside vendors. FCBC and its subsidiaries are also subject to certain state laws that deal with the use and distribution of non-public personal information.

Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent federal agency which insures the deposits of federally-insured banks and savings associations up to certain prescribed limits and safeguards the safety and soundness of financial institutions. The deposits of FCBC’s bank subsidiary are subject to the deposit insurance assessments of the FDIC. Under the FDIC’s deposit insurance assessment system, the assessment rate for any insured institution may vary according to regulatory capital levels of the institution and other factors such as supervisory evaluations.

The FDIC is authorized to prohibit any insured institution from engaging in any activity that poses a serious threat to the insurance fund and may initiate enforcement actions against a bank, after first giving the institution’s primary regulatory authority an opportunity to take such action. The FDIC may also terminate the deposit insurance of any institution that has engaged in or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, order or condition imposed by the FDIC.

Community Reinvestment Act. The Community Reinvestment Act requires depository institutions to assist in meeting the credit needs of their market areas, including low and moderate-income areas, consistent with safe and sound banking practice. Under this Act, each institution is required to adopt a statement for each of its marketing areas describing the depositary institution’s efforts to assist in its community’s credit needs. Depositary institutions are periodically examined for compliance and assigned ratings. Banking regulators consider these ratings when considering approval of a proposed transaction by an institution.

USA Patriot Act of 2001. The Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA Patriot Act) gives the United States Government greater powers over financial institutions to combat money laundering and terrorist access to the financial system in our country. The USA Patriot Act requires the Corporation to establish a program for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity.

Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 contains important new requirements for public companies in the area of financial disclosure and corporate governance. In accordance with section 302(a) of the Sarbanes-Oxley Act, written certifications by FCBC’s Chief Executive Officer and Chief Financial Officer are required. These certifications attest that FCBC’s quarterly and annual reports

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filed with the SEC do not contain any untrue statement of a material fact. See Item 9(a) “Controls and Procedures” of this Form 10-K for FCBC’s evaluation of its disclosure controls and procedures.

Regulation of Bank Subsidiary

In addition to regulation of FCBC, the banking subsidiary is subject to federal regulation regarding such matters as reserves, limitations on the nature and amount of loans and investments, issuance or retirement of its own securities, limitations on the payment of dividends and other aspects of banking operations.

As an Ohio chartered bank, FCBC’s banking subsidiary, Citizens, is supervised and regulated by the State of Ohio Department of Commerce, Division of Financial Institutions. In addition, Citizens is a member of the Federal Reserve System. Citizens is subject to periodic examinations by the State of Ohio Department of Commerce, Division of Financial Institutions, and Citizens is additionally subject to periodic examinations by the Federal Reserve Board. These examinations are designed primarily for the protection of the depositors of the bank and not for their shareholders.

The FRB has adopted capital adequacy guidelines for bank holding companies, pursuant to which, on a consolidated basis, FCBC must maintain total capital of at least 8% of risk-weighted assets. Risk-weighted assets consist of all assets, plus credit equivalent amounts of certain off-balance sheet items, which are weighted at percentage levels ranging from 0% to 100%, based on the relative credit risk of the asset. At least half of the total capital to meet this risk-based requirement must consist of core or “Tier 1” capital, which includes common stockholders’ equity, qualifying perpetual preferred stock (up to 25% of Tier 1 capital) and minority interests in the equity accounts of consolidated subsidiaries, less goodwill, certain other intangibles, and portions of certain non-financial equity investments. The remainder of total capital may consist of supplementary or “Tier 2 capital.” In addition to this risk-based capital requirement, the FRB requires bank holding companies to meet a leverage ratio of a minimum level of Tier 1 capital to average total consolidated assets of 3%, if they have the highest regulatory examination rating, well-diversified risk and minimal anticipated growth or expansion. All other bank holding companies are expected to maintain a leverage ratio of at least 4% of average total consolidated assets. Substantially similar requirements apply to state-chartered member banks, including Citizens.

At December 31, 2008, both FCBC and Citizens were in compliance with these capital requirements. For FCBC’s capital ratios, see Note 18 to the Consolidated Financial Statements in Item 8.

The Federal Reserve Board has adopted regulations governing prompt corrective action to resolve the problems of capital deficient and otherwise troubled state-chartered member banks. At each successively lower defined capital category, a bank is subject to more restrictive and numerous mandatory or discretionary regulatory actions or limits, and the Federal Reserve Board has less flexibility in determining how to resolve the problems of the institution. In addition, the Federal Reserve Board generally can downgrade a bank’s capital category, notwithstanding its capital level, if, after notice and opportunity for hearings, the bank is deemed to be engaged in an unsafe or unsound practice, because it has not corrected deficiencies that resulted in it receiving a less than satisfactory examination rating on matters other than capital or it is deemed to be in an unsafe or unsound condition. Citizens’ capital at December 31, 2008, met the standards for the highest capital category, a “well-capitalized” bank.

Federal Reserve Board regulations also limit the payment of dividends by Citizens to FCBC. Citizens may not pay a dividend if it would cause Citizens not to meet its capital requirements. In addition, the dividends that Citizens may pay to FCBC without prior approval of the Federal Reserve Board is limited to net income for the year plus its retained net income for the preceding two years.

TARP Capital Purchase Program

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On January 23, 2009, FCBC completed the sale to the United States Department of the Treasury (Treasury) of $23,184,000 of newly-issued FCBC non-voting preferred shares as part of the Capital Purchase Plan (CPP) enacted by Treasury under the Emergency Economic Stabilization Act (EESA). To finalize FCBC’s participation in the CPP, FCBC and the Treasury entered into a Letter Agreement, dated January 23, 2009, including the Securities Purchase Agreement — Standard Terms attached thereto (the Securities Purchase Agreement). Pursuant to the terms of the Securities Purchase Agreement, FCBC issued and sold to Treasury (1) 23,184 shares of Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (the Series A Preferred Shares), and (2) a warrant (the Warrant) to purchase 469,312 FCBC common shares, each without par value, at an exercise price of $7.41 per share. Under the standardized CPP terms, cumulative dividends on the Series A Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter, but will be paid only if, as and when declared by FCBC’s Board of Directors. The Series A Preferred Shares have no maturity date and rank senior to the common shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of FCBC.

As long as the Series A Preferred Shares remain outstanding, FCBC is permitted to declare and pay dividends on its common shares only if all accrued and unpaid dividends for all past dividend periods on the Series A Preferred Shares are fully paid. Until the third anniversary of the sale of the Series A Preferred Shares, unless such shares have been transferred or redeemed in whole, any increase in dividends on FCBC’s common shares above the amount of the last quarterly cash dividend per share declared prior to October 14, 2008 ($0.15 per share) will require prior approval of Treasury. The terms of FCBC’s agreement with Treasury allow for additional restrictions, including those on dividends, to be imposed by Treasury, including unilateral amendments required to comply with legislative changes.

Under the terms of the Securities Purchase Agreement, FCBC is required to comply with various executive compensation standards applicable to FCBC’s senior executive officers for the period during which the Treasury holds a debt or equity position in FCBC acquired under the CPP. The Securities Purchase Agreement requires FCBC to comply with the executive compensation standards under Section 111(b) of EESA, as implemented by any guidance or regulation issued under Section 111(b) of EESA and in effect as of the date of the closing of FCBC’s participation in the CPP. These standards include: (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) requiring a clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate; (3) prohibiting certain severance payments to a senior executive, generally referred to as “golden parachute” payments, above specified limits set forth in the U.S. Internal Revenue Code; and (4) agreeing not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive.

The American Recovery and Reinvestment Act of 2009 (the ARRA), which was passed by Congress and signed by the President on February 17, 2009, retroactively amends the executive compensation provisions applicable to participants in the CPP. The ARRA executive compensation standards remain in effect during the period in which any obligation arising from financial assistance provided under TARP remains outstanding (the TARP Period), excluding any period during which the Treasury holds only the Warrant to purchase common shares of FCBC. The ARRA executive compensation standards apply to the FCBC’s Senior Executive Officers (as defined in the ARRA) and are more stringent than those currently in effect under the CPP and the Securities Purchase Agreement or those previously proposed by the Treasury under EESA. The ARRA executive compensation standards include:

• prohibitions on payment or accrual of bonuses, retention awards and other incentive compensation to certain highly compensated employees, other than payments pursuant to written employment agreements entered into on or before February 11, 2009, or grants of restricted stock

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	that do not fully vest during the TARP Period and do not have a value which exceeds one-third of an employee’s total annual compensation;
•	prohibitions on payments to certain employees for a departure from the corporation, except for payments for services performed or benefits accrued;
•	recovery (clawback) of bonuses, retention awards and incentive compensation if the payment was based on materially inaccurate statements of earnings, revenues, gains or other criteria;
•	prohibition on compensation plans that encourage manipulation of reported earnings;
•	retroactive review of bonuses, retention awards and other compensation previously paid to Senior Executive Officers and the next 20 most highly-compensated employees if found by the Treasury to be inconsistent with the purposes of TARP or otherwise contrary to public interest;
•	requiring the establishment of a company-wide policy regarding “excessive or luxury expenditures”; and
•	requiring the inclusion in proxy statements for annual shareholder meetings of a non-binding “Say on Pay” shareholder vote on the compensation of executives.

There is no stated effective date for the ARRA’s executive compensation standards. The Treasury is directed to issue regulations to implement these standards, but those regulations have not yet been issued. As a result, although the ARRA purports to retroactively amend EESA and the regulations issued by the Treasury thereunder, it is unclear the extent to which the various substantive provisions of the ARRA will apply to FCBC.

Under the ARRA, FCBC may repay Treasury without penalty and without the need to raise new capital, subject to Treasury’s consultation with the appropriate regulatory agency, in which event these restrictions would no longer apply.

EESA

In response to the financial crisis affecting the banking system and financial markets, on October 3, 2008, EESA was signed into law and established TARP. As part of TARP, Treasury established the CPP to provide up to $700 billion of funding to eligible financial institutions through the purchase of capital stock and other financial instruments for the purpose of stabilizing and providing liquidity to the U. S. financial markets. In connection with EESA, there have been numerous actions by the Federal Reserve Board, Congress, Treasury, the FDIC, the SEC and others to further the economic and banking industry stabilization efforts under EESA. It remains unclear at this time what further legislative and regulatory measures will be implemented under EESA affecting FCBC.

ARRA

ARRA was signed into law on February 17, 2009. ARRA includes a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health, and education needs. In addition, ARRA imposes certain new executive compensation and corporate expenditure limits on all current and future TARP recipients, including FCBC, until the institution has repaid Treasury, which is now permitted under ARRA without penalty and without the need to raise new capital, subject to Treasury’s consultation with the recipient’s appropriate regulatory agency.

Ohio Department of Insurance

FCBC’s insurance agency subsidiary is subject to the insurance laws and regulations of the State of Ohio and the Ohio Department of Insurance. The insurance laws and regulations require education and licensing of agencies and individual agents, require reports and impose business conduct rules.

Effects of Government Monetary Policy

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The earnings of the subsidiary bank are affected by general and local economic conditions and by the policies of various governmental regulatory authorities. In particular, the Federal Reserve Board regulates money and credit conditions and interest rates to influence general economic conditions, primarily through open market acquisitions or dispositions of United States Government securities, varying the discount rate on member bank borrowings and setting reserve requirements against member and nonmember bank deposits. Federal Reserve Board monetary policies have had a significant effect on the interest income and interest expense of commercial banks, including Citizens, and are expected to continue to do so in the future.

Available Information

FCBC’s Internet address is www.fcza.com The Corporation will provide a copy of FCBC’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act to shareholders upon request. Materials that FCBC files with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20459. This information may also be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

Statistical Information

The following section contains certain financial disclosures related to the Corporation as required under the Securities and Exchange Commission’s Industry Guide 3, “Statistical Disclosures by Bank Holding Companies”, or a specific reference as to the location of the required disclosures in the Registrant’s 2008 Annual Report to Shareholders, portions of which are incorporated in this Form 10-K by reference.

I. Distribution of Assets, Liabilities and Shareholders’ Equity, Interest Rates and Interest Differential

Average balance sheet information and the related analysis of net interest income for the years ended December 31, 2008, 2007 and 2006 is included on pages 16 through 18 — “Distribution of Assets, Liabilities and Shareholders’ Equity, Interest Rates and Interest Differential” and “Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rates”, within Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Corporation’s 2008 Annual Report to Shareholders and is incorporated into this Item I by reference.

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II. Investment Portfolio

The following table sets forth the carrying amount of securities at December 31.

	2008		2007		2006
	(Dollars in thousands)
Available for sale (1)
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	76,511	$	95,723	$	87,379
Obligations of states and political subdivisions		34,673		28,441		16,971
Mortgage-backed securities		39,076		19,706		3,543
Total debt securities		150,260		143,870		107,893
Equity securities		676		481		481
Total	$	150,936	$	144,351	$	108,374
Held to Maturity (1)
Mortgage-backed securities	$	—	$	—	$	4

(1) The Corporation has no securitites of an “issuer” where the aggregate carrying value of such securitites exceeded ten percent of shareholders’ equity.

The following tables set forth the maturities of securities at December 31, 2008 and the weighted average yields of such debt securities. Maturities are reported based on stated maturities and do not reflect principal prepayment assumptions.

						After one					After five but
	Within one year					but within five years					within ten years					After ten years
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in thousands)
Available for Sale (2)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	4,217		4.96	%	$	28,066		5.23	%	$	28,335		5.07	%	$	15,893		4.86	%
Obligations of states and political subdivisions (1)		3,924		4.02			10,085		3.96			5,835		4.41			14,829		4.38
Corporate bonds		—		—			—		—			—		—			—		—
Mortgage-backed securities		129		4.29			1,614		4.08			296		4.71			37,037		5.74
Total	$	8,270		4.51	%	$	39,765		4.86	%	$	34,466		4.96	%	$	67,759		5.24	%

(1)	Weighted average yields on nontaxable obligations have been computed based on actual yields stated on the security.
(2)	The weighted average yield has been computed using the historical amortized cost for available-for-sale securities.

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III. Loan Portfolio

Types of Loans

The amounts of gross loans outstanding at December 31 are shown in the following table according to types of loans.

	2008		2007		2006		2005		2004
	(Dollars in thousands)
Commercial and agricultural	$	109,375	$	96,385	$	56,789	$	65,903	$	76,469
Commercial real estate		313,000		299,005		218,084		195,983		202,616
Residential real estate		325,962		343,160		234,344		206,411		228,467
Real estate construction		30,628		33,480		28,294		29,712		25,315
Consumer		17,409		20,359		19,909		25,268		32,807
Leases		164		185		267		615		1,723
Credit card and other		400		2,467		341		632		1,213
	$	796,938	$	795,041	$	558,028	$	524,524	$	568,610

Commercial loans are those made for commercial, industrial and professional purposes to sole proprietorships, partnerships, corporations and other business enterprises. Agricultural loans are for financing agricultural production, including all costs associated with growing crops or raising livestock. Commercial and agricultural loans may be secured, other than by real estate, or unsecured, requiring one single repayment or on an installment repayment schedule. The loans involve certain risks relating to changes in local and national economic conditions and the resulting effect on the borrowing entities. Secured loans not collateralized by real estate mortgages maintain a loan-to-value ratio ranging from 50% as in the case of certain stocks, to 100% in the case of collateralizing with a savings or time deposit account. Unsecured credits rely on the financial strength and previous credit experience of the borrower and in many cases the financial strength of the principals when such credit is extended to a corporation.

Commercial real estate mortgage loans are made predicated on having a security interest in real property and are secured wholly or substantially by that lien on real property. Commercial real estate mortgage loans generally maintain a loan-to-value ratio of 75%.

Residential real estate mortgage loans are made predicated on security interests in real property and secured wholly or substantially by those liens on real property. Such real estate mortgage loans are primarily loans secured by one-to-four family real estate. Residential real estate mortgage loans generally pose less risk to the Corporation due to the nature of the collateral being less susceptible to sudden changes in value.

Real estate construction loans are for the construction of new buildings or additions to existing buildings. Generally, these loans are secured by one-to-four family real estate. The Corporation controls disbursements in connection with construction loans.

Consumer loans are made to individuals for household, family and other personal expenditures. These expenditures include the purchase of vehicles or furniture, educational expenses, medical expenses, taxes or vacation expenses. Consumer loans may be secured, other than by real estate, or unsecured, generally requiring repayment on an installment repayment schedule. Consumer loans pose a relatively higher credit risk. This higher risk is moderated by the use of certain loan value limits on secured credits and aggressive collection efforts. The collectibility of consumer loans is influenced by local and national economic conditions.

Lease loans are made for commercial, industrial and professional purposes. These loans are made to sole proprietorships, partnerships, corporations, and other business enterprises.

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Letters of credit represent extensions of credit granted in the normal course of business, which are not reflected in the Corporation’s consolidated financial statements. As of December 31, 2008 and 2007, the Corporation was contingently liable for $1.2 million and $1.6 million of letters of credit. In addition, Citizens had issued lines of credit to customers. Borrowings under such lines of credit are usually for the working capital needs of the borrower. At December 31, 2008 and 2007, Citizens had commitments to extend credit in the aggregate amounts of approximately $116.6 million and $121.7 million, respectively. Of these amounts, $104.1 million and $110.3 million represented lines of credit and construction loans, and $12.6 million and $11.4 million represented overdraft protection commitments. Such amounts represent the portion of total commitments that had not been used by customers as of December 31, 2008 and 2007.

Maturities and Sensitivity of Loans to Changes in Interest Rates

The following table shows the amount of commercial and agricultural, commercial real estate, and real estate construction loans outstanding as of December 31, 2008, which, based on the contract terms for repayments of principal, are due in the periods indicated. In addition, the amounts due after one year are classified according to their sensitivity to changes in interest rates.

	Maturing
			After one
	Within		but within		After
	one year		five years		five years		Total
	(Dollars in thousands)
Commercial and agricultural	$	41,461	$	29,181	$	38,733	$	109,375
Commercial real estate		19,660		31,604		261,736		313,000
Real estate construction		8,408		5,909		16,311		30,628
	$	69,529	$	66,694	$	316,780	$	453,003

	Interest
	Sensitivity
	Fixed		Variable
	rate		rate
	(Dollars in thousands)
Due after one but within five years	$	36,094	$	30,600
Due after five years		89,229		227,551
	$	125,323	$	258,151

The preceding maturity information is based on contract terms at December 31, 2008 and does not include any possible “rollover” at maturity date. In the normal course of business, Citizens considers and acts on the borrowers’ requests for renewal of loans at maturity. Evaluation of such requests includes a review of the borrower’s credit history, the collateral securing the loan and the purpose for such request.

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Risk Elements

The following table presents information concerning the amount of loans at December 31 that contain certain risk elements.

	2008		2007		2006		2005		2004
	(Dollars in thousands)
Loans accounted for on a nonaccrual basis (1)	$	17,943	$	9,308	$	7,576	$	14,401	$	8,273
Loans contractually past due 90 days or more as to principal or interest payments (2)		3,053		2,423		2,717		331		318
Loans whose terms have been renegotiated to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower (3)		1,173		2,435		3,291		—		—
Total	$	22,169	$	14,166	$	13,584	$	14,732	$	8,591
Impaired loans included in above totals		8,800		3,757		3,934		6,597		4,281
Impaired loans not included in above totals		5,837		9,208		12,812		7,072		11,149
Total impaired loans	$	14,637	$	12,965	$	16,746	$	13,669	$	15,430

(1)	Loans are placed on nonaccrual status when doubt exists as to the collectibility of the loan, including any accrued interest. With a few immaterial exceptions, commercial and agricultural, commercial real estate, residential real estate and construction loans past due 90 days are placed on nonaccrual unless they are well collateralized and in the process of collection. Generally, consumer loans are charged-off within 30 days after becoming past due 90 days unless they are well collateralized and in the process of collection. Credit card loans are charged-off before reaching 120 days of delinquency. Once a loan is placed on nonaccrual, interest is then recognized on a cash basis where future collections of principal is probable.
(2)	Excludes loans accounted for on a nonaccrual basis.
(3)	Excludes loans accounted for on a nonaccrual basis and loans contractually past due ninety days or more as to principal or interest payments.

There are no loans as of December 31, 2008, other than those disclosed above, where known information about probable credit problems of borrowers caused management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms. There are no other interest-bearing assets that would be required to be disclosed in the table above, if such assets were loans as of December 31, 2008. The gross interest income that would have been recorded on nonaccrual loans and restructured loans in 2008 if the loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination, if held for part of the period, is $1,407. The amount of interest income on such loans actually included in net income in 2008 was $74.

Interest income recognition associated with impaired loans was as follows.

	2008		2007		2006		2005		2004
	(Dollars in thousands)
Interest income on impaired loans, including interest income recognized on a cash basis	$	626	$	1,008	$	533	$	530	$	471
Interest income on impaired loans recognized on a cash basis	$	626	$	1,008	$	533	$	530	$	471

There were no foreign outstandings for any period presented. No concentrations of loans exceeded 10% of total loans.

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IV. Summary of Loan Loss Experience

Analysis of the Allowance for Loan Losses

The following table shows the daily average loan balances and changes in the allowance for loan losses for the years indicated.

	2008			2007			2006			2005			2004
	(Dollars in thousands)
Daily average amount of loans net of unearned income	$	799,413		$	586,889		$	539,241		$	544,791		$	507,164
Allowance for loan losses at beginning of year	$	7,374		$	8,060		$	9,212		$	11,706		$	6,308
Loan charge-offs:
Commercial and agricultural and commercial real estate		5,008			2,538			2,185			3,038			1,173
Real estate mortgage		1,952			711			416			1,420			884
Real estate construction		33			29			—			—			—
Consumer		788			750			865			1,223			810
Leases		17			—			—			—			—
Credit card and other		—			—			—			25			21
		7,798			4,028			3,466			5,706			2,888
Recoveries of loans previously
Charged-off:
Commercial and agricultural and commercial real estate		547			552			256			819			187
Real estate mortgage		197			173			443			671			190
Real estate construction		18			7			—			—			—
Consumer		282			311			479			584			329
Leases		35			—			—			—			—
Credit card and other		—			2			8			15			29
		1,079			1,045			1,186			2,089			735
Net charge-offs (1)		(6,719	)		(2,983	)		(2,280	)		(3,617	)		(2,153	)
Balance from acquisition		—			1,277			—			—			5,746
Provision for loan losses (2)		8,207			1,020			1,128			1,123			1,805
Allowance for loan losses at end of year	$	8,862		$	7,374		$	8,060		$	9,212		$	11,706
Allowance for loan losses as a percent of loans at year-end		1.11	%		0.93	%		1.45	%		1.76	%		2.06	%
Ratio of net charge-offs during the year to average loans outstanding		0.84	%		0.52	%		0.42	%		0.66	%		0.43	%

(1)

The amount of net charge-offs fluctuates from year to year due to factors relating to the condition of the general economy and specific business.

(2)

The determination of the balance of the allowance for loan losses is based on an analysis of the loan portfolio and reflects an amount that, in management’s judgment, is adequate to provide for probable incurred loan losses. Such analysis is based on a review of specific loans, the character of the loan portfolio, current economic conditions, and such other factors as management believes require current recognition in estimating probable incurred loan losses.

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Allocation of Allowance for Loan Losses

The following table allocates the allowance for loan losses at December 31 to each loan category. The allowance has been allocated according to the amount deemed to be reasonably necessary to provide for the probable losses estimated to be incurred within the following categories of loans at the dates indicated.

	2008					2007
			Percentage					Percentage
			of loans to					of loans to
	Allowance		total loans			Allowance		total loans
	(Dollars in thousands)
Commercial and agriculture	$	1,220		13.7	%	$	1,735		12.4	%
Commercial real estate		3,330		39.3			3,059		37.7
Real estate mortgage		2,524		40.9			1,551		43.0
Real estate construction		699		3.8			183		4.1
Consumer		442		2.2			359		2.5
Credit card and other		—		0.1			—		0.3
Unallocated		647		—			487		—
	$	8,862		100.0	%	$	7,374		100.0	%

	2006					2005
			Percentage					Percentage
			of loans to					of loans to
	Allowance		total loans			Allowance		total loans
	(Dollars in thousands)
Commercial and agriculture	$	1,742		10.2	%	$	3,049		12.6	%
Commercial real estate		3,230		39.1			3,645		37.4
Real estate mortgage		1,458		42.0			1,395		39.3
Real estate construction		1,037		5.1			279		5.7
Consumer		357		3.5			433		4.8
Credit card and other		—		—			—		0.1
Leases		—		0.1			—		0.1
Unallocated		236		—			411		—
	$	8,060		100.0	%	$	9,212		100.0	%

	2004
			Percentage
			of loans to
	Allowance		total loans
	(Dollars in thousands)
Commercial and agriculture	$	3,227		13.5	%
Commercial real estate		5,097		35.6
Real estate mortgage		2,067		40.1
Real estate construction		67		4.5
Consumer		1,175		5.8
Credit card and other		15		0.2
Leases		9		0.3
Unallocated		49		—
	$	11,706		100.0	%

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Citizens measures the adequacy of the allowance for loan losses by using both specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component consists of a pooling of commercial credits risk graded as special mention and substandard that are not individually examined, and general reserves, which are based on a rolling average of historical net charge-offs. The allowance for loan and lease losses to total loans increased from 0.93% in 2007 to 1.11% in 2008. The unallocated reserve of FCBC and its affiliates has increased from $487 in 2007 to $647 in 2008. Factors in the determination of the unallocated reserve include items such as changes in the economic and business conditions of its market, changes in lending policies and procedures, changes in loan concentrations, as well as a few others. In 2008, compared to 2007, some of these factors worsened, contributing to the increase of the unallocated reserves.

As the loan portfolio continues to shift towards more real estate loans, the allocation of the reserve to these loans has also grown. The loss allocation for commercial and agricultural loans decreased in 2008. Although the volume of this piece of the loan portfolio increased, the relative credit quality of these loans has improved in 2008 by virtue of previously reserved commercial and agricultural loans having been charged off in 2008.

Deposits

The average daily amount of deposits (all in domestic offices) and average rates paid on such deposits is summarized for the years indicated.

	2008					2007					2006
	Average		Average			Average		Average			Average		Average
	balance		rate paid			balance		rate paid			balance		rate paid
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	121,541		N/A		$	89,171		N/A		$	92,382		N/A
Interest-bearing demand deposits		151,959		1.36	%		100,471		2.46	%		95,227		1.87	%
Savings, including Money Market deposit accounts		204,646		0.98	%		150,467		1.03	%		156,495		0.85	%
Certificates of deposit, including IRA’s		327,502		3.46	%		234,024		4.29	%		222,480		3.58	%
	$	805,648				$	574,133				$	566,584

Maturities of certificates of deposits and individual retirement accounts of $100,000 or more outstanding at December 31, 2008 are summarized as follows.

			Individual
	Certificates		Retirement
	of Deposits		Accounts		Total
	(Dollars in thousands)
3 months or less	$	28,144	$	1,874	$	30,018
Over 3 through 6 months		11,017		1,041		12,058
Over 6 through 12 months		16,382		2,518		18,900
Over 12 months		18,323		1,497		19,820
	$	73,866	$	6,930	$	80,796

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Return on Equity and Assets

Information required by this section is incorporated by reference to the information appearing under the caption “Five-Year Selected Consolidated Financial Data” located on page 1 through 3 of First Citizens Banc Corp’s 2008 Annual Report to Shareholders. The dividend payout ratio was - -17.9% in 2008, 89.6% in 2007 and 100.0% in 2006.

Short-term Borrowings

See Note 10 to the consolidated financial statements (located at page 52 of the Annual Report to Shareholders) and “Distribution of Assets, Liabilities and Shareholders’ Equity, Interest Rates and Interest Differential” (located at pages 16 and 17 of the Annual Report to Shareholders) for the statistical disclosures for short-term borrowings for 2008, 2007, and 2006.

Item 1A. Risk Factors

CHANGING ECONOMIC CONDITIONS AND THE GEOGRAPHIC CONCENTRATION OF OUR MARKETS MAY UNFAVORABLY IMPACT US.

Our operations are concentrated in eleven counties in North/Central and Central Ohio. As a result of this geographic concentration in contiguous markets, our results depend largely upon economic conditions in these market areas. A deterioration in economic conditions in one or more of these markets could result in one or more of the following:

- an increase in loan delinquencies;

- an increase in problem assets and foreclosures;

- a decrease in the demand for our products and services; and

- a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with problem loans and collateral coverage.

WE MAY BE UNABLE TO MANAGE INTEREST RATE RISKS, WHICH COULD REDUCE OUR NET INTEREST INCOME.

Our results of operations are affected principally by net interest income, which is the difference between interest earned on loans and investments and interest expense paid on deposits and other borrowings. We cannot predict or control changes in interest rates. Regional and local economic conditions and the policies of regulatory authorities, including monetary policies of the Board of Governors of the Federal Reserve System, affect interest income and interest expense. We have ongoing policies and procedures designed to manage the risks from changes in market interest rates. However, changes in interest rates can still have a material adverse effect on our profitability.

In addition, certain assets and liabilities may react in different degrees to changes in market interest rates. For example, interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while interest rates on other types may lag behind. Some of our assets, such as adjustable rate mortgages, have features that restrict changes in their interest rates, including rate caps.

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Interest rates are highly sensitive to many factors that are beyond our control. Some of these factors include:

• inflation;

• recession;

• unemployment;

• money supply;

• international disorders; and

• instability in domestic and foreign financial markets.

Changes in interest rates may affect the level of voluntary prepayments on the Corporation’s loans and may also affect the level of financing or refinancing by customers. Although the Corporation pursues an asset-liability management strategy designed to control its risk from changes in market interest rates, changes in interest rates can still have a material adverse effect on its profitability.

STRONG COMPETITION WITHIN OUR MARKET AREA MAY REDUCE OUR ABILITY TO ATTRACT AND RETAIN DEPOSITS AND ORIGINATE LOANS.

We face competition both in originating loans and in attracting deposits. We compete for clients by offering excellent service and competitive rates on our loans and deposit products. The type of institutions we compete with include large regional financial institutions, community banks, thrifts and credit unions operating within the Corporation’s market area. Nontraditional sources of competition for loan and deposit dollars come from captive auto finance companies, mortgage banking companies, internet banks, brokerage companies, insurance companies and direct mutual funds. As a result of their size and ability to achieve economies of scale, certain of our competitors offer a broader range of products and services than we offer. In addition, to stay competitive in our markets we may need to adjust the interest rates on our products to match the rates offered by our competitors, which could adversely affect our net interest margin. As a result, our profitability depends upon our continued ability to successfully compete in our market areas while achieving our investment objectives.

OUR BUSINESSES HAVE BEEN AND MAY CONTINUE TO BE ADVERSELY AFFECTED BY CURRENT CONDITIONS IN THE FINANCIAL MARKETS AND ECONOMIC CONDITIONS GENERALLY.

The capital and credit markets have been experiencing unprecedented levels of volatility for much of 2008. As a consequence of the recession that the United States now finds itself in, business activity across a wide range of industries face serious difficulties due to the lack of consumer spending and the extreme lack of liquidity in the global credit markets. Unemployment has also increased significantly.

A sustained weakness or weakening in business and economic conditions generally or specifically in the markets in which we do business could have one or more of the following adverse effects on our businesses:

• A decrease in the demand for loans and other products and services offered by us;

• A further impairment of certain intangible assets, such as goodwill;

• An increase in the number of clients who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us. An increase in the number of delinquencies, bankruptcies or defaults could result in a higher level of nonperforming assets, net charge-offs, provision for loan losses, and valuation adjustments on loans held for sale.

OUR PARTICIPATION IN THE U.S. TREASURY’S CPP IMPOSES RESTRICTIONS AND OBLIGATIONS ON THE CORPORATION THAT LIMIT OUR ABILITY TO INCREASE DIVIDENDS, REPURCHASE SHARES OF OUR COMMON STOCK AND ACCESS EQUITY CAPITAL MARKETS.

Subsequent to December 31, 2008, the Corporation issued preferred stock and a warrant to purchase our common stock to the U.S. Treasury as part of its Capital Purchase Program (CPP). Prior to January 25, 2012,

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unless the Corporation has redeemed all of the preferred stock or the U.S. Treasury has transferred all of the preferred stock to a third party, the agreement pursuant to which such securities were sold limits the payment of dividends on our common stock to the current quarterly dividend of $0.15 per share without prior regulatory approval, and limits our ability to repurchase shares of our common stock. In addition, unless the Corporation redeems the preferred stock during the first five years, the dividends on this capital will increase from 5% to 9%. Depending on market conditions at the time, this increase in dividends could significantly impact our liquidity.

RECENT DEVELOPMENTS IN THE RESIDENTIAL MORTGAGE AND RELATED MARKETS AND THE ECONOMY MAY ADVERSELY AFFECT OUR BUSINESS.

Recently, the residential mortgage market in the United States, including Ohio, has been negatively impacted by several economic factors, including increasing rates and payments on adjustable-rate mortgages, decreasing housing values and increased credit standards for borrowers. As a result, delinquencies, foreclosures and loses with respect to residential construction and mortgage loans have increased and may continue to increase. Additionally, the lower housing prices and appraisal values may result in additional delinquencies and loan losses. While the residential real estate loans held in our portfolio are typically originated using conservative underwriting standards and do not include sub-prime loans, we do originate and hold fixed- and adjustable-rate loans and residential construction loans. If the residential loan market continues to deteriorate, especially in Ohio and our local markets, our financial condition and results of operations could be adversely affected.

THE ENACTMENT OF EESA AND ARRA MAY SIGNIFICANTLY AFFECT OUR FINANCIAL CONDITION, RESULTS OF OPERATION, LIQUIDITY OR STOCK PRICE.

EESA, which established TARP, was signed into law on October 3, 2008. As part of TARP, Treasury established the CPP to provide up to $700 billion of funding to eligible financial institutions through the purchase of capital stock and other financial instruments for the purpose of stabilizing and providing liquidity to the U.S. financial markets. Then, on February 17, 2009, President Obama signed ARRA, as a sweeping economic recovery package intended to stimulate the economy and provide for broad infrastructure, energy, health, and education needs. There can be no assurance as to the actual impact that EESA or its programs, including the CPP, and ARRA or its programs, will have on the national economy or financial markets. The failure of these significant legislative measures to help stabilize the financial markets and a continuation or worsening of current financial market conditions could materially and adversely affect our business, financial condition, results of operations, access to credit or the trading price of our Common Shares.

There have been numerous actions undertaken in connection with or following EESA and ARRA by the Federal Reserve Board, Congress, the Treasury, the FDIC, the SEC and others in efforts to address the current liquidity and credit crisis in the financial industry that followed the sub-prime mortgage market meltdown which began in late 2007.  These measures include homeowner relief that encourages loan restructuring and modification; the establishment of significant liquidity and credit facilities for financial institutions and investment banks; the lowering of the federal funds rate; emergency action against short selling practices; a temporary guaranty program for money market funds; the establishment of a commercial paper funding facility to provide back-stop liquidity to commercial paper issuers; and coordinated international efforts to address illiquidity and other weaknesses in the banking sector. The purpose of these legislative and regulatory actions is to help stabilize the U.S. banking system. EESA, ARRA and the other regulatory initiatives described above may not have their desired effects.  If the volatility in the markets continues and economic conditions fail to improve or worsen, our business, financial condition and results of operations could be materially and adversely affected.

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FEDERAL AND STATE GOVERNMENTS MAY ADOPT LAWS RESPONSIVE TO THE CURRENT CREDIT CONDITIONS THAT WOULD ADVERSELY AFFECT OUR ABILITY TO COLLECT ON LOANS.

Federal or state governments might adopt legislation or regulations reducing the amount that our customers are required to pay under existing loan contracts or limit our ability to foreclose on collateral. Additionally, legislation has been proposed to give judges the ability to adjust the principal and interest payments on mortgages to allow homeowners to avoid foreclosure. Such adjustments could adversely affect our profitability and financial condition.

FDIC INSURANCE PREMIUMS MAY INCREASE MATERIALLY, NEGATIVELY AFFECTING OUR PROFITABILITY.

The FDIC insures deposits at FDIC insured financial institutions, including Citizens. The FDIC charges the insured financial institutions premiums to maintain the Deposit Insurance Fund at a certain level. Current economic conditions have increased bank failures and expectations for further failures, in which case the FDIC insures payment of deposits up to insured limits from the Deposit Insurance Fund. In late 2008, the FDIC announced an increase in insurance premium rates of seven basis points for the first quarter of 2009. The FDIC announced its adoption of an interim final rule imposing a special assessment of 10 basis points and a final rule adjusting the risk-based calculation used to determine the premiums due from each financial institution. Management of FCBC expects that the special assessment and the changes to the premium calculation could increase FCBC’s insurance expense in 2009 significantly. Future increases may be announced, which would negatively affect our net income.

CONCERN OF CUSTOMERS OVER DEPOSIT INSURANCE MAY CAUSE A DECREASE IN DEPOSITS AT CITIZENS.

With recent increased concerns about bank failures, customers increasingly are concerned about the extent to which their deposits are insured by the FDIC. Customers may withdraw deposits from Citizens in an effort to ensure that the amount they have on deposit at Citizens is fully insured. Decreases in deposits may adversely affect our funding costs and net income.

LEGISLATIVE OR REGULATORY CHANGES OR ACTIONS COULD ADVERSELY IMPACT THE FINANCIAL SERVICES INDUSTRY.

The financial services industry is extensively regulated. Banking laws and regulations are primarily intended for the protection of consumers, depositors and the deposit insurance fund, not to benefit our shareholders. Changes to laws and regulations or other actions by regulatory agencies may negatively impact us, possibly limiting the services we provide, increasing the ability of non-banks to compete with us or requiring us to change the way we operate. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on the operation of an institution and the ability to determine the adequacy of an institution’s allowance for loan losses. Failure to comply with applicable laws, regulations and policies could result in sanctions being imposed by the regulatory agencies, including the imposition of civil money penalties, which could have a material adverse effect on our operations and financial condition. The significant federal and state banking regulations that affect us are described in this annual report under the heading “Supervision and Regulation.”

TRADING IN OUR COMMON SHARES IS VERY LIMITED, WHICH MAY ADVERSELY AFFECT THE TIME AND THE PRICE AT WHICH YOU CAN SELL YOUR CORPORATION COMMON SHARES.

Although the common shares of the Corporation are quoted on The NASDAQ Capital Market, trading in the Corporation’s common shares is not active, and the spread between the bid and the asked price is often wide. As a result, you may not be able to sell your shares on short notice, and the sale of a large number of shares at one time could temporarily depress the market price. The price at which you may be able to sell your

22

common shares may be significantly lower than the price at which you could buy Corporation common shares at that time.

Item 1B. Unresolved Staff Comments

The Corporation has received no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of its 2008 fiscal year and that remained unresolved.

Item 2. Properties

FCBC neither owns nor leases any properties. Citizens owns its main office at 100 East Water Street, Sandusky, Ohio, which is also the office of FCBC. Citizens also owns branch banking offices in the following Ohio communities; Sandusky (2), Norwalk, Berlin Heights, Castalia, New Washington, Shelby (3), Crestline, Chatfield, Tiro, Greenwich, Plymouth, Shiloh, Dublin, Hilliard, Plain City, Russells Point, Urbana (2) , and Quincy. Citizens leases branch banking offices in the Ohio communities of Akron, Huron, Norwalk, West Liberty and Willard. Additionally, Citizens currently owns a loan production office in Port Clinton, Ohio. In the third quarter of 2008 the Corporation closed its loan production offices in Marion, Ohio and Marysville, Ohio. SCC leases its processing center located at 303 Howard Drive, Sandusky, Ohio.

Item 3. Legal Proceedings

In August, 2006, Champaign National Bank (Champaign) terminated the employment of Mary L. Boesch (Boesch). On November 9, 2006, Boesch filed a lawsuit against Champaign and its parent Futura Banc Corp. (Futura) in the Common Pleas Court of Summit County, Ohio alleging gender and age discrimination and retaliatory discharge under Ohio law. She requested damages in excess of $25,000, punitive damages and her costs in maintaining the action. The court granted summary judgment in favor of both Champaign and Futura respecting all claims, and Boesch filed an appeal.

On December 17, 2007, First Citizens Banc Corp (First Citizens) completed its acquisition of Futura, and Champaign was merged into First Citizens’ subsidiary The Citizens Banking Company (Citizens). As a result, Citizens became a party to the litigation. The court of appeals has since upheld the summary judgment in favor of Futura and upheld the summary judgment upon the claims of discrimination against Champaign. However, the court decided that there were factual issues relevant to the retaliatory discharge claim against Champaign (now Citizens) and reversed the summary judgment on that claim.

Citizens has reached a settlement with Boesch and has reflected in its financial statements as of December 31, 2008, the amount of the settlement with the employee.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Information regarding the market in which FCBC’s common shares are traded, the prices at which such shares have traded, the number of shareholders of record and dividend information is incorporated by reference to the information appearing under the caption “Common Stock and Shareholder Matters” located on page 5 of First Citizens Banc Corp’s 2008 Annual Report to Shareholders.

23

The performance graph required by this item is incorporated by reference to the graph appearing under the caption “Stockholders Return Performance” on page 4 of the 2008 Annual Report to the Shareholders.

As of December 31, 2008, there were approximately 1,400 shareholders of record (not including the number of persons or entities holding stock in nominee or street name through various brokerage firms) of the Corporation’s common stock.

Information regarding the restrictions on the Corporation’s payment of dividends is included herein under Item 1 of this Form 10-K and is incorporated into this Section by reference.

The Corporation repurchased none of its common shares during 2008.

Item 6. Selected Financial Data

Information required by this section is incorporated by reference to the information appearing under the caption “Five-Year Selected Consolidated Financial Data” and “Five-Year Selected Ratios” located on pages 1 through 3 of First Citizens Banc Corp’s 2008 Annual Report to Shareholders.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation — As of December 31, 2008 and December 31, 2007 and for the Years Ending December 31, 2008, 2007 and 2006

Information required by this section is incorporated by reference to the information appearing under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located on pages 6 through 21 of First Citizens Banc Corp’s 2008 Annual Report to Shareholders.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk is incorporated herein by reference to pages 21 through 23 of First Citizens Banc Corp’s 2008 Annual Report to Shareholders.

Item 8. Financial Statements and Supplementary Financial Data

First Citizens Banc Corp’s Report of Independent Auditors and Consolidated Financial Statements and accompanying notes are listed below and are incorporated herein by reference to First Citizens Banc Corp’s 2008 Annual Report to Shareholders (Exhibit 13.1, pages 26 through 70). The supplementary financial information specified by Item 302 of Regulation S-K, selected quarterly financial data, is included in Note 22 — “Quarterly Financial Data (Unaudited)” to the consolidated financial statements found on page 69.

Report of Independent Registered Public Accounting Firm on Financial Statements

Consolidated Balance Sheets
December 31, 2008 and 2007

Consolidated Statements of Income
For each of the three years in the period ended December 31, 2008

Consolidated Statements of Changes in Shareholders’ Equity
For each of the three years in the period ended December 31, 2008

Consolidated Statements of Cash Flows
For each of the three years in the period ended December 31, 2008

Notes to Consolidated Financial Statements

24

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On December 16, 2008, the Corporation approved the engagement of S.R. Snodgrass, A.C. to serve as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

During the Corporation’s three most recent fiscal years ended December 31, 2008, 2007 and 2006, there were no disagreements between the Corporation and Crowe Horwath LLP (Crowe) on any matter of accounting principles, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Crowe, would have caused Crowe to make reference to the subject matter of the disagreements in its report on the consolidated financial statements for such years.

Item 9(A). Controls and Procedures Disclosures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2008, were effective.

Management’s Report on Internal Control over Financial Reporting

Information required by this section is incorporated by reference to the information appearing under the captions “Management’s Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting” located on pages 25 through 26 of First Citizens Banc Corp’s 2008 Annual Report to Shareholders.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Corporation’s internal control over financial reporting that occurred during the Corporation’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Item 9(B). Other Information

There was no information the Corporation was required to disclose in a report on Form 8-K during the fourth quarter of 2008 that was not disclosed.

PART III

Information relating to the Items 10, 11, 12, 13 and 14 are included in First Citizens Banc Corp’s Proxy Statement and Notice of Annual Meeting of Shareholders to be held Tuesday, April 21, 2009, (2008 Proxy Statement) dated March 18, 2009, to be filed with the Commission on Form DEF 14-A, pursuant to Section 14(A) of the Securities Exchange Act of 1934 and is incorporated by reference into this Form 10-K Annual Report.

Item 10. Directors, Executive Officers, and Corporate Governance

25

The information contained under the captions “Election of Directors,” “Executive Officers of the Corporation,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Board of Director Meetings and Committees,” and “Corporate Governance — Code of Ethics” of the 2008 Proxy Statement is incorporated herein by reference in response to this item.

Item 11. Executive Compensation.

The information contained under the captions “Executive Compensation” and “2008 Compensation of Directors” of the 2008 Proxy Statement is incorporated by reference in response to this item.

The Corporation’s Compensation, Benefits and Liability Committee had no members who were officers or employees of the Corporation during 2008.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information contained under the caption “Beneficial Ownership of Common Shares of the Corporation” of the 2008 Proxy Statement is incorporated by reference in response to this item>

Equity Compensation Plan Information

The following table sets forth information concerning common shares authorized or available for issuance under the Corporation’s Stock Option and Stock Appreciation Rights Plan as of December 31, 2008.

	Number of
	securities to be				Number of securities
	issued upon		Weighted-average		remaining available for
	exercise of		exercise price of		future issuance under equity
	outstanding		outstanding		compensation plans
	options, warrants		options, warrants		(excluding securities
	and rights		and rights		reflected in column (a))
Plan Category	(a)		(b)		(c)
Equity compensation plans Approved by security holders		29,500		25.42		195,500	(1)
Equity compensation plans not approved by security holders		0		0		0
Total		29,500		25.42		195,500	(1)

(1) The number of securities available under the plan is subject to adjustment under specified circumstances, including the issuance of additional shares in mergers. No adjustments have been made to date.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information contained under the caption “Transactions with Directors, Officers and Associates” of the 2008 Proxy Statement is incorporated by reference in response to this item.

Item 14. Principal Accountant Fees and Services.

The information contained under the caption “Fees of Independent Registered Public Accounting Firm” of the 2008 Proxy Statement filed with the Securities and Exchange Commission is incorporated by reference in response to this item.

26

PART IV

Item 15. Exhibit and Financial Statement Schedules

(a) Documents filed as a Part of the Report

1 Financial Statements. The following financial statements, together with the applicable report of independent auditors, can be located under Item 8 of this Form 10-K:

Report of Independent Registered Public Accounting Firm on Financial Statements

Consolidated Balance Sheets
December 31, 2008 and 2007

Consolidated Statements of Income
For the three years ended December 31, 2008

Consolidated Statements of Changes in Shareholder’s Equity
For the three years ended December 31, 2008

Consolidated Statements of Cash Flows
For the three years ended December 31, 2008

Notes to Consolidated Financial Statements

2 Financial Statement Schedules. All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

27

3 Exhibits

Exhibit	Description	Location
3.1(a)	Articles of Incorporation, as amended, of First Citizens Banc Corp.	Filed as Exhibit 3.1 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2005, filed on March 16, 2006 and incorporated herein by reference.
3.1(b)	Certificate of Amendment by Shareholders or Members as filed with the Ohio Secretary of State on January 12, 2009, evidencing the adoption by the shareholders of First Citizens Banc Corp on January 5, 2009 of an amendment to Article FOURTH to authorize the issuance of up to 200,000 preferred shares, without par value.	Included herewith
3.1(c)	Certificate of Amendment by Directors or Incorporators to Articles, filed with the Ohio Secretary of State on January 21, 2009, evidencing adoption of an amendment by the Board of Directors of First Citizens Banc Corp to Article FOURTH to establish the express terms of the Fixed Rate Cumulative Perpetual Preferred Shares, Series A, of First Citizens.	Filed as Exhibit 3.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
3.2	Amended and restated Code of Regulations of First Citizens Banc Corp (adopted April 17, 2007).	Included herewith
4.1	Certificate for Registrant’s Common Stock (filed as Exhibit 4.1 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2005.	Filed on March 16, 2006 and incorporated herein by reference.
4.2	Warrant to purchase 469,312 Shares of Common Stock of First Citizens Banc Corp, issued to the U.S. Department of the Treasury on January 23, 2009.	Filed as Exhibit 4.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
4.3	Agreement to furnish instrument and agreements defining rights of holders of long-term debt.	Included herewith
10.1	First Citizens Banc Corp Stock Option and Stock Appreciation Rights Plan dated April 18, 2000.	Filed as Exhibit 10.1 to the First Citizens Banc Corp’s Form 8-K filed on November 21, 2005.
10.2	Employment agreement with George E. Steinemann.	Filed as Exhibit 10.4 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.3	Change in Control Agreement — James O. Miller.	Filed as Exhibit 10.6 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.4	Change in Control Agreement — Charles C. Riesterer.	Filed as Exhibit 10.7 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.5	Change in Control Agreement — Todd A. Michel.	Filed as Exhibit 10.8 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.

28

Exhibit	Description	Location
10.6	Change in Control Agreement — Leroy C. Link.	Filed as Exhibit 10.9 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.7	Agreement and Plan of Merger dated as of June 7, 2007, by and between First Citizens Banc Corp and Futura Banc Corp.	Filed as Annex A to the Prospectus of First Citizens Banc Corp/Joint Proxy Statement of First Citizens Banc Corp dated September 27, 2007 and filed on September 28, 2007 pursuant to Rule 424(b)(3) under the Securities Act of 1933 ( Registration No. 333-145931) and incorporated herein by reference.
10.8	Letter Agreement, dated January 20, 2009, including the Securities Purchase Agreement — Standard Terms attached thereto as Exhibit A, between First Citizens Banc Corp and the U.S. Department of the Treasury.	Filed as Exhibit 10.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.9	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and James O. Miller.	Filed as Exhibit 10.2.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.10	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and Todd A. Michel.	Filed as Exhibit 10.2.2 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.11	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and James E. McGookey.	Filed as Exhibit 10.2.3 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.12	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and Richard J. Dutton.	Filed as Exhibit 10.2.4 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.13	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and Charles C. Riesterer.	Filed as Exhibit 10.2.5 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
11.1	Statement regarding earnings per share	Included in Note 21 to the Consolidated Financial Statements that are included in Exhibit 13.1 of this Form 10-K.
13.1	First Citizens Banc Corp 2008 Annual Report to Shareholders.	Included herewith
16	Letter regarding change in certifying accountant.	Filed as Exhibit 16.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed December 19, 2008, and incorporated herein by reference.
21.1	Subsidiaries of FCBC.	Included herewith
23.1	Consent of Independent Registered Public Accounting Firm.	Included herewith
31.1	Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer.	Included herewith
31.2	Rule 13a-14(a)/15-d-14(a) Certification of Chief Financial Officer.	Included herewith

29

Exhibit	Description	Location
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith

30

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

(Registrant) First Citizens Banc Corp

By	/s/ James O. Miller
	James O. Miller, President (Principal Executive Officer)
By	/s/ Todd A. Michel
	Todd A. Michel, Senior Vice President (Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on March 16, 2009 by the following persons (including a majority of the Board of Directors of the Registrant) in the capacities indicated:

/s/ John O. Bacon	/s/ Allen R. Nickles, CPA, CFE, FCPA
John O. Bacon, Director	Allen R. Nickles, CPA, CFE, FCPA, Director
/s/ Laurence A. Bettcher	/s/ John P. Pheiffer
Laurence A. Bettcher, Director	John P. Pheiffer, Director
/s/ Barry W. Boerger	/s/ J. William Springer
Barry W. Boerger, Director	J. William Springer, Director
/s/ Thomas A. Depler	/s/ David A. Voight
Thomas A. Depler, Director	David A. Voight, Chairman of the Board
/s/ Blythe A. Friedley	/s/ Richard A Weidrick, CPA, PFS
Blythe A. Friedley, Director	Richard A Weidrick, CPA, PFS
/s/ James D. Heckelman	/s/ Daniel J. White
James D. Heckelman, Director	Daniel J. White, Director
/s/ Allen R. Maurice	/s/ J. George Williams
Allen R. Maurice, Director	J. George Williams, Director
/s/ James O. Miller	/s/ Gerald B. Wurm
James O. Miller, President & CEO, Director	Gerald B. Wurm, Director
/s/ W. Patrick Murray W. Patrick Murray, Director

31

Exhibit	Description	Location
3.1(a)	Articles of Incorporation, as amended, of First Citizens Banc Corp.	Filed as Exhibit 3.1 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2005, filed on March 16, 2006 and incorporated herein by reference.
3.1(b)	Certificate of Amendment by Shareholders or Members as filed with the Ohio Secretary of State on January 12, 2009, evidencing the adoption by the shareholders of First Citizens Banc Corp on January 5, 2009 of an amendment to Article FOURTH to authorize the issuance of up to 200,000 preferred shares, without par value.	Included herewith
3.1(c)	Certificate of Amendment by Directors or Incorporators to Articles, filed with the Ohio Secretary of State on January 21, 2009, evidencing adoption of an amendment by the Board of Directors of First Citizens Banc Corp to Article FOURTH to establish the express terms of the Fixed Rate Cumulative Perpetual Preferred Shares, Series A, of First Citizens.	Filed as Exhibit 3.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
3.2	Amended and restated Code of Regulations of First Citizens Banc Corp (adopted April 17, 2007).	Included herewith
4.1	Certificate for Registrant’s Common Stock (filed as Exhibit 4.1 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2005.	Filed on March 16, 2006 and incorporated herein by reference.
4.2	Warrant to purchase 469,312 Shares of Common Stock of First Citizens Banc Corp, issued to the U.S. Department of the Treasury on January 23, 2009.	Filed as Exhibit 4.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
4.3	Agreement to furnish instrument and agreements defining rights of holders of long-term debt.	Included herewith
10.1	First Citizens Banc Corp Stock Option and Stock Appreciation Rights Plan dated April 18, 2000.	Filed as Exhibit 10.1 to the First Citizens Banc Corp’s Form 8-K filed on November 21, 2005.
10.2	Employment agreement with George E. Steinemann.	Filed as Exhibit 10.4 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.3	Change in Control Agreement — James O. Miller.	Filed as Exhibit 10.6 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.4	Change in Control Agreement — Charles C. Riesterer.	Filed as Exhibit 10.7 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.5	Change in Control Agreement — Todd A. Michel.	Filed as Exhibit 10.8 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.

32

Exhibit	Description	Location
10.6	Change in Control Agreement — Leroy C. Link.	Filed as Exhibit 10.9 to the First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2004, filed on March 16, 2005 and incorporated herein by reference.
10.7	Agreement and Plan of Merger dated as of June 7, 2007, by and between First Citizens Banc Corp and Futura Banc Corp.	Filed as Annex A to the Prospectus of First Citizens Banc Corp/Joint Proxy Statement of First Citizens Banc Corp dated September 27, 2007 and filed on September 28, 2007 pursuant to Rule 424(b)(3) under the Securities Act of 1933 ( Registration No. 333-145931) and incorporated herein by reference.
10.8	Letter Agreement, dated January 20, 2009, including the Securities Purchase Agreement — Standard Terms attached thereto as Exhibit A, between First Citizens Banc Corp and the U.S. Department of the Treasury.	Filed as Exhibit 10.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.9	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and James O. Miller.	Filed as Exhibit 10.2.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.10	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and Todd A. Michel.	Filed as Exhibit 10.2.2 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.11	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and James E. McGookey.	Filed as Exhibit 10.2.3 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.12	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and Richard J. Dutton.	Filed as Exhibit 10.2.4 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
10.13	Letter Agreement, dated January 20, 2009, between First Citizens Banc Corp and Charles C. Riesterer.	Filed as Exhibit 10.2.5 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
11.1	Statement regarding earnings per share	Included in Note 21 to the Consolidated Financial Statements that are included in Exhibit 13.1 of this Form 10-K.
13.1	First Citizens Banc Corp 2008 Annual Report to Shareholders.	Included herewith
16	Letter regarding change in certifying accountant.	Filed as Exhibit 16.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed December 19, 2008, and incorporated herein by reference.
21.1	Subsidiaries of FCBC.	Included herewith
23.1	Consent of Independent Registered Public Accounting Firm.	Included herewith
31.1	Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer.	Included herewith

33

Exhibit	Description	Location
31.2	Rule 13a-14(a)/15-d-14(a) Certification of Chief Financial Officer.	Included herewith
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith

34

EX-3.1.B

Exhibit 3.1(b)

www.sos.state.oh.us
e-mail: busserv@sos.state.oh.us

Prescribed by:

The Ohio Secretary of State
Central Ohio: (614) 466-3910

Toll Free: 1-877-SOS-FILE (1/877-767-3453)

Expedite this Form: (Select One)

Mail Form to one of the Following:

l    PO Box 1390
    Columbus, OH 43216

***Requires an additional fee of $100***

    PO Box 1329

O     Columbus, OH 43216

Certificate of Amendment by

(1) Domestic for Profit	PLEASE READ INSTRUCTIONS	(2) Domestic Nonprofit
o     Amended         (122-AMAP)	þ    Amendment         (125-AMDS)	o    Amended         (128-AMAN)	o    Amendment         (128-AMD)
Complete the general information in this section for the box checked above
Name of Corporation	First Citizens Banc Corp
Charter Number	695656
Name of Officer	James O. Miller
Title	President and Chief Executive Officer
þ Please check if additional provisions attached.
The above named Ohio corporation, does hereby certify that:
þ A meeting of the	þ Shareholders	o directors (nonprofit only)
o members was duly called and held on		January 5, 2009
		(Date)
at which meeting a quorum was present in person or by proxy, based upon the quorum present, an affirmative vote was cast which entitled them to exercise 75.159 % as the voting power of the corporation.
o In a writing signed by all of the	o shareholders	o directors (nonprofit amended only) articles only)
o members who would be entitled to the notice of a meeting or such other proportion not less than a majority as the articles of regulations bylaws permit.
Clause applies if amended box is checked.
Resolved, that the following amended articles of incorporations be and the same are hereby adopted to supercede and take the place of the existing articles of incorporation and all amendments thereto.

All of the following information must be completed if an amended box is checked. If an amendment box is checked, complete the areas that apply.
FIRST:	The name of the corporation is:
SECOND:	The place in the State of Ohio where its principal office is located is in the City of:
(city, village or township)		(county)
THIRD: The purposes of the corporation are as follows:
FOURTH: The number of shares which the corporation is authorized to have outstanding is:			20,200,000
	(Does not apply to box (2))		See Attached

REQUIRED	/s/ James O. Miller	January 8, 2009
	Authorized Representative
Must be authenticated
(signed) by an authorized
Representative
(See instructions)	James O. Miller
	(Print Name)
	President and Chief Executive Officer

ADDITIONAL PROVISIONS TO THE
CERTIFICATE OF AMENDMENT BY SHAREHOLDERS
OF FIRST CITIZENS BANC CORP

          Article FOURTH shall be amended and restated in its entirety as follows:

          FOURTH: The authorized number of shares of the Corporation shall be Twenty Million Two Hundred Thousand (20,200,000), consisting of Twenty Million (20,000,000) common shares, each without par value (the “common shares”), and Two Hundred Thousand (200,000) preferred shares, each without par value (the “preferred shares”).

          The directors of the Corporation are hereby authorized to provide for the issuance of, and to issue, one or more series of preferred shares and, in connection with the creation of any such series, to adopt an amendment or amendments to the Articles of the Corporation determining, in whole or in part, the express terms of any such series to the fullest extent now or hereafter permitted under Ohio law, including, but not limited to, determining: the division of such shares into series and the designation and authorized number of shares of each series; dividend or distribution rights; dividend rate; liquidation rights, preferences and price; redemption rights and price; sinking fund requirements; voting rights; pre-emptive rights; conversion rights; restrictions on the issuance of shares; and other relative, participating, optional or other special rights and privileges of each such series and the qualifications, limitations or restrictions thereof. Notwithstanding the foregoing, in no event shall the voting rights of any series of preferred shares be greater than the voting rights of the common shares, except to the extent specifically required with respect to any series of preferred shares which may be designated for issuance to the United States Department of the Treasury under the TARP Capital Purchase Program instituted under the Emergency Economic Stabilization Act of 2008. In the event that at any time the directors of the Corporation shall have established and designated one or more series of preferred shares consisting of a number of shares which constitutes less than all of the authorized number of preferred shares, the remaining authorized preferred shares shall be deemed to be shares of an undesignated series of preferred shares until designated by the directors of the Corporation as being part of a series previously established or a new series then being established by the directors. Without limiting the generality of the foregoing, and subject to the rights of any series of preferred shares then outstanding, the amendment providing for issuance of any series of preferred shares may provide that such series shall be superior or rank equally or be junior to the preferred shares of any other series to the extent permitted by Ohio law.

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

CODE OF REGULATIONS

OF

FIRST CITIZENS BANC CORP

AMENDED AND RESTATED

CODE OF REGULATIONS
OF
FIRST CITIZENS BANC CORP

Table of Contents

	Page
ARTICLE I — Offices	1
Section 1. Principal Office	1
Section 2. Other Offices	1
ARTICLE II — Meetings of Shareholders	1
Section 1. Annual Meeting	1
Section 2. Special Meetings	1
Section 3. Place of Meetings	2
Section 4. Notice of Meetings	2
Section 5. Waiver of Notice	2
Section 6. Quorum	2
Section 7. Advance Notice of Shareholder Proposals	3
Section 8. Action Without Meeting	4
ARTICLE III — Directors	4
Section 1. Number and Term	4
Section 2. Nominations	5
Section 3. Removal	6
ARTICLE IV — Meeting and Compensation of Directors	6
Section 1. Meetings of the Board	6
Section 2. Quorum	7
Section 3. Action Without Meeting	7
Section 4. Compensation	7
Section 5. By-Laws	8
ARTICLE V — Committees	8
Section 1. Executive Committees	8
Section 2. Other Committees	8
ARTICLE VI — Officers	8
Section 1. General Provisions	8
Section 2. Term of Office	9
ARTICLE VII — Duties of Officers	9
Section 1. Chairman of the Board	9
Section 2. Vice Chairman of the Board	9
Section 3. President	10
Section 4. Vice Presidents	10
Section 5. Secretary	10
Section 6. Treasurer	11
Section 7. Assistant and Subordinate Officers	11
Section 8. Duties of Officers May Be Delegated	11

	Page
ARTICLE VIII — Indemnification	11
ARTICLE IX — Certificates For Shares	13
Section 1. Form and Execution	13
Section 2. Lost, Mutilated or Destroyed Certificates	13
Section 3. Registered Shareholders	14
ARTICLE X — Fiscal Year	14
ARTICLE XI — Amendments	14

AMENDED AND RESTATED

CODE OF REGULATIONS

OF

FIRST CITIZENS BANC CORP

ARTICLE I

Offices

     Section 1. Principal Office. The principal office of the Corporation shall be at such place in the City of Sandusky, Ohio, as may be designated from time to time by the Board of Directors.

     Section 2. Other Offices. The Corporation shall also have offices at such other places without, as well as within, the State of Ohio, as the Board of Directors may from time to time determine.

ARTICLE II

Meetings of Shareholders

     Section 1. Annual Meeting. The annual meeting of the shareholders of the Corporation for the purpose of electing directors and transacting such other business as may come before the meeting, shall be held between the hours of 8:00 a.m. and 5:00 p.m. on the third Tuesday of April of each year, but if a legal holiday, then on the next business day following, or at such other time as may be fixed by the Board of Directors.

     Section 2. Special Meetings. Special meetings of the shareholder may be called at any time by the Chairman of the Board of Directors, the President, a majority of the Board of Directors acting with or without a meeting, or shareholders owning, in the aggregate, not less than twenty-five percent (25%) of the stock of the Corporation.

     Section 3. Place of Meetings. Meetings of shareholders shall be held at the main office of the Corporation unless the Board of Directors decides that a meeting shall be held at some other place within or without the State of Ohio and causes the notice thereof to so state.

     Section 4. Notice of Meetings. Unless waived, notice of each annual or special meeting shall be given in accordance with applicable law to each shareholder of record (a) as of the day next preceding the day on which notice is given or (b) if a record date thereof is duly fixed, of record as of said date. Notice of such meeting shall be given or mailed, postage prepaid, at least seven (7) and not more than sixty (60) days prior to the date of the meeting. If mailed, it shall be directed to a shareholder at his address as the name appears upon the records of the Corporation.

     All notices with respect to any shares of record in the names of two or more persons may be given to whichever of such persons is named first on the books of the Corporation, and notice so given shall be effective as to all the holders of record of such shares.

     Every person who by operation of law, transfer, or otherwise shall become entitled to any share or right or interest therein, shall be bound by every notice in respect of such share which, prior to his name and address being entered upon the books of the Corporation as the registered holder of such share, shall have been given to the person in whose name such share appeared of record.

     Section 5. Waiver of Notice. Any shareholder, either before or after any meeting, may waive any notice required to be given by law or under these Regulations.

     Section 6. Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders, unless otherwise provided by law; but less than a quorum may adjourn any meeting, from time to time, and a meeting may be held, as adjourned, without further notice. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Incorporation.

     Section 7. Advance Notice of Shareholder Proposals. At any annual meeting of shareholders, proposals by shareholders shall be considered if advance notice thereof has been timely given as provided in this Section 7 and such proposals are otherwise proper for consideration under applicable law, the Articles of Incorporation of the Corporation and these Regulations. Notice of any proposal to be presented by any shareholder shall be given in writing to the Secretary of the Corporation and received at the Corporation’s principal executive offices, not less than 60 nor more than 90 days prior to the shareholder’s meeting; provided, however, that in the event that less than 75 days’ notice to the shareholders or prior public disclosure of the date of the meeting is given or made, the written notice of such shareholder’s intent to make such proposal must be received by the Secretary not later than the close of business on the fifteenth day following the earlier of the day on which such notice of the date of the meeting was given or such public disclosure was made. Any shareholder who gives notice of any such proposal shall deliver therewith (a) the text of the proposal to be presented, (b) a brief written statement of the reasons why such shareholder favors the proposal, (c) such shareholder’s name and record address, the number and class of all shares of each class of stock of the Corporation beneficially owned by such shareholder, and (d) any material interest of such shareholder in the proposal (other than as a shareholder). The person presiding at the meeting in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall determine whether such notice under this Section 7 has not been given. No proposals by shareholders shall be considered at any special meeting of shareholders unless the special meeting was called for the purpose of considering such proposal. If, pursuant to law or rule of the Securities and Exchange Commission, the Corporation is required to set forth a proposal of a shareholder in its proxy statement, the provisions of such law or rule, to the extent applicable, shall prevail over any conflicting provisions of this Section 7 with respect to that shareholder’s proposal.

     Section 8. Action Without Meeting. Any action which may be authorized or taken at any meeting of shareholders may be authorized or taken without a meeting in a writing or writings signed by all of the holders of shares who would be entitled to notice of a meeting of the shareholders held for such purpose. Such writing or writings shall be filed with or entered upon the records of the Corporation.

ARTICLE III

Directors

     Section 1. Number and Term. The property, business and affairs of the Corporation shall be managed and controlled by the Board of Directors, no member of which shall be of the age of seventy-five (75) years or more on the date of his or her election, or the date of his or her appointment in the event of such appointment to fill a vacancy on the Board of Directors; provided, however, that such age qualification shall not apply to any person who may be serving as a member of the Board of Directors on April 14, 1997. The number of directors of the Corporation shall not be less than five nor more than twenty-five, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the whole Board of Directors. As used in these Regulations, the term “whole Board” means the total number of directors which the Corporation would have if there were no vacancies.

     Members of the Board of Directors shall be elected each year at the annual meeting of stockholders to a one-year term. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the number of directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, and any directors so chosen shall hold office until the next election of the directors and until their successors shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.

     Section 2. Nominations. Nominations of persons for election to the Board of the Corporation at a meeting of the stockholders may be made by or at the direction of the Board of Directors or may be made at a meeting of stockholders by any stockholder of the Corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 2 of Article III. Such nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 14 days nor more than 50 days prior to the meeting; provided, however, that in the event that less than 21 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so delivered or mailed no later than the close of business on the 7th day following the day on which notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs, but in no event shall such timely notice of stockholder nomination be received by the Secretary of the Corporation less than seven (7) days prior to the stockholder meeting. Such stockholder’s notice to the Secretary shall set forth (a) as to each person whom the stockholder proposed to nominate for the election or re-election as a Director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, and (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person; and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as Director of the Corporation. No person shall be eligible for election as a Director of the Corporation at a meeting of the stockholders unless nominated in accordance with the procedures set forth herein.

The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure and the defective nomination shall be disregarded.

     Section 3. Removal. Any director or the entire Board of Directors may be removed with or without cause by the affirmative vote of a majority of the shares then entitled to vote at the election of directors. Notwithstanding the above, if, in the event of any proposed business combination transaction, as defined in Article Eighth of the Articles of Incorporation, the affirmative vote of eighty percent (80%) shall be required to remove any or the entire Board of Directors.

ARTICLE IV

Meetings and Compensation of Directors

     Section 1. Meetings of the Board. A meeting of the Board of Directors shall be held immediately following the adjournment of each shareholders’ meeting at which directors are elected, or within ten (10) days thereafter, and notice of such meeting need not be given.

     The Board of Directors may, by by-laws or resolution, provide for other meetings of the Board.

     Special meetings of the Board of Directors may be held at any time upon call of the Chairman of the Board of Directors, President, a Vice President, or any two members of the Board.

     Notice of any special meeting of the Board of Directors shall be mailed to each director, addressed to him at his residence or usual place of business, at least two (2) days before the date on which the meeting is to be held, or shall be given to him in any other manner permitted by applicable law within the time limits specified in such law. Every such notice shall state the time and place of the meeting but need not state the purposes thereof. Notice of any meeting of the Board need not be given to any director, however, if duly waived by him whether before or after such meeting is held, or if he shall be present at such meeting; and any meeting of the Board shall be a legal meeting without any notice thereof having been given, if all the directors shall be present thereat.

     Meetings of the Board shall be held at the office of the Corporation, or at such other place, within or without the State of Ohio, as the Board may determine from time to time and as may be specified in the notice thereof. Meetings of the Board of Directors may also be held by the utilization of simultaneous telephonic communications linking all directors present at such meetings, and all such business conducted via such telephonic communication shall be considered legally enforceable by the Corporation.

     Section 2. Quorum. A majority of the Board of Directors serving in such capacity shall constitute a quorum for the transaction of business, provided that whenever less than a quorum is present at the time and place appointed for any meeting of the Board, a majority of those present may adjourn the meeting from time to time, without notice other than by announcement at the meeting until a quorum shall be present.

     Section 3. Action Without Meeting. Any action may be authorized or taken without a meeting in a writing or writings signed by all the directors, which writing or writings shall be filed with or entered upon the records of the Corporation.

     Section 4. Compensation. The directors, as such, shall not receive any salary for their services, but by resolution of a majority of the stockholders entitled to vote for the election of directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefore. Members of any standing or special committee may by resolution of the Board be allowed such compensation for their services as the Board may deem reasonable; additional compensation may be allowed to directors for special services rendered as the Board may deem reasonable.

     Section 5. By-Laws. For the government of its actions, the Board of Directors may adopt by-laws consistent with the Articles of Incorporation and these Regulations.

ARTICLE V

Committees

     Section 1. Executive Committee. The Board of Directors of the Corporation may form an Executive Committee of the Board of Directors and designate at least three of its members to constitute the members of such Executive Committee. The Board of Directors may also designate one or more of its members to be alternate members of the Executive Committee to take the place of any absent member or members at any meeting of the Executive Committee. The Executive Committee shall have and may exercise, between meetings of the Board, all the powers and authority of the Board in the management of the business and affairs of the Corporation, except that the Executive Committee shall not have the power or authority to fill vacancies in the Board of Directors or in any committee of the Directors.

     Section 2. Other Committees. The Board of Directors may by resolution provide for such standing or special committees as it deems desirable, and discontinue the same at pleasure. Each such committee shall have such powers and perform such duties, not inconsistent with law, as may be delegated to it by the Board of Directors. Vacancies in such committees shall be filled by the Board of Directors or as it may provide.

ARTICLE VI

Officers

     Section 1. General Provisions. The Board of Directors shall elect a President, such number of Vice Presidents as the Board may from time to time determine, a Secretary and Treasurer, and, in its discretion, a Chairman of the Board of Directors and a Vice Chairman of the Board of Directors. Any two or more offices may be held by the same person, but no officer shall execute, acknowledge

or verify any instrument in more than one capacity if such instrument is required by law, the Articles of Incorporation or these Resolutions to be executed, acknowledged or verified by two or more officers. If no such Chairman of the Board is elected by the Board of Directors, the President of the Corporation shall act as presiding officer of the Corporation. The Board of Directors may from time to time create such offices and appoint such other officers, subordinate officers and assistance officers as it may determine. The President and the Chairman of the Board shall be, but the other officers need not be, chosen from among the members of the Board of Directors.

     Section 2. Term of Office. The officers of the Corporation shall hold office at the pleasure of the Board of Directors and, unless sooner removed by the Board of Directors, until the reorganization meeting of the Board of Directors following the date of their election and until their successors are chosen and qualified.

     The Board of Directors may remove any officer at any time, with or without cause, by a majority vote.

     A vacancy in any office, however created, may be filled by the Board of Directors.

ARTICLE VII

Duties of Officers

     Section 1. Chairman of the Board. The Chairman of the Board, if one be elected, shall preside at all meetings of the shareholders and Board of Directors and shall have such other powers and duties as may be prescribed by the Board of Directors or by the Ohio Revised Code.

     Section 2. Vice Chairman of the Board. The Vice Chairman of the Board, if one be elected, shall preside at all meetings of the shareholders and the Board of Directors, in the absence of the Chairman of the Board. The Vice Chairman shall have such powers and duties as may be prescribed by the Board of Directors, or prescribed by the Chairman of the Board, or the Ohio Revised Code.

     Section 3. President. The President shall be the chief executive officer of the Corporation and shall exercise supervision over the business of the Corporation and over its several officers, subject, however, to the control of the Board of Directors. In the absence of or if a Chairman of the Board shall not have been elected or a Vice Chairman shall not have been elected, the President shall preside at meetings of the shareholders and Board of Directors. He shall have authority to sign all certificates for shares and all deeds, mortgages, bonds, contracts, notes and other instruments requiring his signature; and shall have all the powers and duties prescribed by the Ohio Revised Code and such others as the Board of Directors may from time to time assign to him.

     Section 4. Vice Presidents. The Vice Presidents shall perform such duties as are conferred upon them by these regulations or as may from time to time be assigned to them by the Board of Directors, the Chairman of the Board or the President. At the request of the President, or in his absence or disability, the Vice President, designated by the President (or in the absence of such designation, the Vice President designated by the Board), shall perform all the duties of the President, and when so acting, shall have all the powers of the President. The authority of Vice Presidents to sign in the name of the Corporation all certificates for shares and authorized deeds, mortgages, bonds, contracts, notes and other instruments, shall be coordinate with like authority of the President. Any one or more of the Vice Presidents may be designated as an “Executive Vice President”.

     Section 5. Secretary. The Secretary shall keep minutes of all the proceedings of the shareholders and Board of Directors, and shall make proper record of the same, which shall be attested by him; sign all certificates for shares, and all deeds, mortgages, bonds, contracts, notes, and other instruments executed by the Corporation requiring his signature; give notice of meetings of shareholders and directors; produce on request at each meeting of shareholders for the election of directors a certified list of shareholders arranged in alphabetical order; keep such books as may be required by the Board of Directors and file all reports to States, to the Federal Government, and to

foreign countries; and perform such other and further duties as may from time to time be assigned to him by the Board of Directors, the Chairman of the Board or by the President.

     Section 6. Treasurer. The Treasurer shall have general supervision of all finances; he shall receive and have in charge all money, bills, notes, deeds, leases, mortgages and similar property belonging to the Corporation, and shall do with the same as may from time to time be required by the Board of Directors. He shall cause to be kept adequate and correct accounts of the business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, stated capital, and shares, together with such other accounts as may be required, and, upon the expiration of his term of office, shall turn over to his successor or to the Board of Directors all property, books, papers and money of the Corporation in his hands; and he shall perform such other duties as from time to time may be assigned to him by the Board of Directors.

     Section 7. Assistant and Subordinate Officers. The Board of Directors may appoint such assistant and subordinate officers as it may deem desirable. Each such officer shall hold office during the pleasure of the Board of Directors, and perform such duties as the Board of Directors may prescribe.

     The Board of Directors may, from time to time, authorize any officer to appoint and remove assistant and subordinate officers, to prescribe their authority and duties, and to fix their compensation.

     Section 8. Duties of Officers may be Delegated. In the absence of any officer of the Corporation, or for any other reason the Board of Directors may deem sufficient, the Board of Directors may delegate, for the time being, the powers or duties, or any of them, of such officer to any other officer, or to any director.

ARTICLE VIII

Indemnification

     The Corporation shall indemnify, to the full extent permitted or authorized by applicable law, as it may from time to time be amended, any person made or threatened to be made a party to any suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, or employee of a bank, or other corporation, partnership, joint venture, trust or other enterprise, provided, however, that such person has acted in good faith and in a manner that the person reasonably believed to be in and not opposed to the best interest of the Corporation and, with respect to any criminal action or proceeding, such person has no reasonable cause to believe his or her conduct was unlawful, and provided further that the Corporation shall not indemnify a person with respect to such person’s willful misconduct. As a condition precedent to the indemnification provided by this Article VIII, the person to be indemnified must first: (1) promptly notify the President or the Secretary of the Corporation of any actual or potential action, suit or proceeding; and (2), except with respect to a criminal proceeding, authorize and permit the Corporation, in its sole discretion, to choose any legal counsel to defend and otherwise handle the action, suit or proceeding and matters related thereto (including, but not limited to, any counterclaims, cross-claims and defenses); and (3), except with respect to a criminal proceeding, permit the Corporation to assume total, complete and exclusive control of the action, suit or proceedings and all proceedings and matters related thereto (including, but not limited to, any counterclaims, cross-claims and defenses); and (4), in all respects, cooperate with the Corporation and its counsel in the defense and/or settlement of the action, suit or proceeding and in the prosecution and/or settlement of any counterclaims, cross-claims and defenses. The indemnification provided by this Article VIII shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled under the Articles of Incorporation of the Corporation or these Regulations, or any agreement, vote of shareholders or disinterested directors, or otherwise,

both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer or employee and shall inure to the benefit of the heirs, executors and administrators of such a person.

ARTICLE IX

Certificates for Shares

     Section 1. Form and Execution. Certificates for shares shall be issued to each shareholder in such form as shall be approved by the Board of Directors. Such certificates shall be executed in the manner provided by applicable law and shall certify the number and class of shares held by the shareholder in the Corporation, but no certificates for shares shall be delivered until such shares are fully paid. When such a certificate is countersigned by an incorporated transfer agent or registrar, the signature of any of said officers of the Corporation may be a facsimile, or engraved, stamped or printed. Although any officer of the Corporation whose manual or facsimile signature is affixed to a share certificate shall cease to be such officer before the certificate is delivered, such certificate, nevertheless, shall be effective in all respects when delivered.

     Such certificate for shares shall be transferable in person or by attorney, but, except as hereinafter provided in the case of lost, mutilated or destroyed certificates, no transfer of shares shall be entered upon the records of the Corporation until the previous certificates, if any, given for the same shall have been surrendered and canceled.

     Section 2. Lost, Mutilated or Destroyed Certificates. If any certificate for shares is lost, mutilated or destroyed, the Board of Directors may authorize the issuance of a new certificate in place thereof, upon such terms and conditions as it may deem advisable. The Board of Directors in its discretion may refuse to issue such new certificates until the Corporation has been indemnified by a final order or decree of a court of competent jurisdiction.

     Section 3. Registered Shareholders. A person in whose name shares are of record on the books of the Corporation shall conclusively be deemed the unqualified owner thereof for all purposes and have capacity to exercise all rights of ownership. Neither the Corporation nor any transfer agent of the Corporation shall be bound to recognize any equitable interest in or claim to such shares on the part of any other person, whether disclosed upon such certificate or otherwise, nor shall they be obliged to see to the execution of any trust or obligation.

ARTICLE X

Fiscal Year

     The fiscal year of the Corporation shall end on the 31st day of December in each year, or on such other day as may be fixed from time to time by the Board of Directors.

ARTICLE XI

Amendments

     These Regulations may be amended or repealed at any meeting of shareholders called for that purpose by the affirmative vote of the holders of record of shares entitling them to exercise a majority of the voting power on such proposal or, without a meeting, by the written consent of the holders of record of shares entitling them to exercise two-thirds (2/3) of the voting power on such proposal.

/s/ James E. McGookey

(Secretary)

Date: April 17, 2007

EX-4.3

Exhibit 4.3

[FIRST CITIZENS BANC CORP. LETTERHEAD]

March 16, 2009                              

Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re: First Citizens Banc Corp. Form 10-K for the fiscal year ended December 31, 2008

Ladies and Gentlemen:

First Citizens Banc Corp., an Ohio corporation (FCBC), is today filing an Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the Form 10-K), as executed on March 16, 2009.

Pursuant to the instructions relating to the Exhibits in Item 601(b)(4)(iii) of Regulation S-K, FCBC hereby agrees to furnish the Commission, upon request, copies of instruments and agreements defining the rights of holders of its long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to the Form 10-K. None of such long-term debt exceeds 10% of the total assets of FCBC and its subsidiaries on a consolidated basis.

Very truly yours,

/s/ James O. Miller James O. Miller

President and Chief Executive Officer

EX-13.1

Exhibit 13.1

First Citizens Banc Corp 2008 Annual Report

FIVE YEAR CONDENSED CONSOLIDATED FINANCIAL SUMMARY

	2008			2007			2006			2005			2004
EARNINGS
Net Income (000)	$	(38,978	)	$	6,885		$	6,160		$	6,659		$	4,813
Net Income (000) excluding impairment charge (1)	$	4,313		$	6,885		$	6,160		$	6,659		$	4,813
Per Common Share (2)
Earnings (basic and diluted)	$	(5.06	)	$	1.25		$	1.12		$	1.15		$	0.92
Earnings, excluding impairment charge (basic and diluted) (1)	$	0.56		$	1.25		$	1.12		$	1.15		$	0.92
Book Value	$	9.94		$	16.37		$	14.53		$	15.02		$	15.19
Dividends Paid	$	0.91		$	1.12		$	1.12		$	1.12		$	1.08
BALANCES
Assets (millions)		1,053.6			1,119.3			749.0			750.9			817.5
Deposits (millions)		809.9			839.8			564.6			577.1			647.0
Net Loans (millions)		787.8			787.4			549.7			514.8			556.2
Shareholders’ Equity (millions)		76.6			126.2			79.5			87.1			88.2
PERFORMANCE RATIOS
Return on Average Assets		(3.54	%)		0.88	%		0.83	%		0.85	%		0.71	%
Return on Average Assets, excluding impairment charge (1)		0.39	%		0.88	%		0.83	%		0.85	%		0.71	%
Return on Average Equity		(31.57	%)		8.78	%		7.68	%		7.69	%		6.74	%
Return on Average Equity, excluding impairment charge (1)		3.49	%		8.78	%		7.68	%		7.69	%		6.74	%
Equity Capital Ratio		7.27	%		11.27	%		10.61	%		11.60	%		10.79	%
Net Loans to Deposit Ratio		97.27	%		93.76	%		97.36	%		89.20	%		85.96	%
Loss Allowance to Total Loans		1.11	%		0.93	%		1.45	%		1.76	%		2.06	%

(1)	Management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate the Corporation’s performance. For additional information, please see the non-GAAP disclosure on page three of this document.
(2)	Per share data has been adjusted for the business combination with FNB Financial Corporation in October 2004 and with Futura Banc Corp. in 2007.

To Our Shareholders:

It is amazing how quickly the world has changed. In last year’s letter we reported to you that 2007 was the most profitable year in five. Our efforts in diversifying our markets, taking advantage of size efficiencies, and adapting to a changing marketplace were bearing fruit and were reflected in our earnings and growth.

At that time, no one could predict the events of 2008. During the past year, we experienced plummeting property values, the onset of a significant economic recession, historic losses of value in the stock market, a dramatic drop in interest rates, and the continuation of a shift in jobs from higher paying manufacturing positions to lesser paying service positions. And we are now seeing crushing layoffs and slowdowns.

Considering the issues of 2008, we are pleased to report cash earnings and the payment of dividends. Many banks in Ohio and the nation are unable to say this.

Earnings

After writing off $43,291,000 in goodwill, our net loss for the year was a negative $5.06 per share. As we previously communicated, this does not affect cash, cash earnings, regulatory capital, or dividends. Again, the goodwill was accumulated as a result of the many acquisitions we have made since 1990. Based on our annual review, we, like many other companies, felt it was appropriate to reduce its value on our books.

Net income before the goodwill adjustment was $.56 per share. While this was a good performance for this environment, the economy caused increases in our problem loans and in our expenses for collecting these loans. As a result, additions to our loan loss reserves and collection expenses reduced our earnings by approximately $.62 per share. If we add back the additional reserves, expenses, and goodwill adjustment, the adjusted earnings would have been $1.18 per share for 2008 versus $1.24 per share in 2007.

This is not to dismiss the net loss or the decrease in adjusted earnings. However, while the current market and recession have had a temporary impact on net earnings, it has not materially impacted our ability to generate very respectable gross revenue. Our net interest income before loan loss provision was $5.24 per share in 2008 and $5.37 per share in 2007. The Federal Reserve comparative statistics on Citizens Bank show a 2008 interest margin of 4.48% compared to a peer number of 3.68%. Non-interest income for the bank compares reasonably at .82% of assets to peer banks’ .86% of assets.

Stock Performance

There is no need to point out the dreadful performance of financial stocks in general and Ohio financial stocks in particular. We are no exception. Below is an alternative performance chart, not comparing us to national market statistics, but to publicly traded Ohio financial stocks from year end 2004 to year end 2008. This removes our distortion of the 2003 Russell Index and faces the reality that publicly traded Ohio financials have not performed to any national index.

Source: Bloomberg, SNL Securities

Dividends

For years we have differentiated ourselves as a dividend stock. Over the last five years we have paid a total of $5.35 per share in dividends. Over the last 10 years we have paid a total of $11.58 per share in dividends. This is a strong dividend payout. We understand our shareholders’ interest in dividends. Our goal is to continue a strong dividend program – but our dividend payments are going to be impacted by our earnings, and our earnings are going to be impacted by the dollars that we need to add to our loan loss reserve. The dollars needed for the loan loss reserve are going to be affected by the breadth and depth of this recession.

The Treasury’s Capital Purchase Program does place a $.15 per share per quarter limit on dividends for three years. In view of the economic climate, we will be happy if earnings increase to the extent that we could ask for special permission to exceed $.15 during the three year limitation period.

Staying With The Fundamentals

Banks throughout Ohio have had to adapt to the changes in the state’s economy. Over the last several years we have seen decreased employment opportunities, shifts away from manufacturing, population shifts, etc. Many Ohio banks decided to deploy their capital into new markets outside of the state. Many established offices in other parts of the country, such as Florida, Georgia, and Arizona. Many banks looked at sub-prime mortgages, 120% financing mortgages, negative amortization mortgages, and a variety of non-conventional products. Many banks saw the attractive 8% return on Fannie Mae and Freddie Mac stock and invested heavily in them.

We had the opportunity to invest our capital and resources into these types of alternatives. If we had, you would have seen and been very pleased with the short-term boost to earnings. I can assure you that you would not be pleased today. We were uncomfortable with heated markets outside of areas that we know. We believe that customers should make down payments and have the ability to make their loan payments. And investments that look too good to be true usually are.

We believe that the fundamentals of gathering deposits and making loans in markets we know and developing personal customer relationships continue to prevail. By sticking with the fundamentals, we have avoided the systemic problems plaguing many banks. The issues we confront today are marketplace issues and not issues with our business model.

The Recession

Our short-term goal is to come through this recession with the least negative impact to the corporation. Paraphrasing a comment from a former United States Comptroller of Currency, banks in this economic climate need “a fortress balance sheet with deep wells of liquidity”. This is at the heart of the Capital Purchase Program. It is also the basis for our efforts to gather the liquidity of deposits, our programs and communications to maintain the confidence of our communities, our investments of additional resources in loan credit analysis with the goal of limiting loan losses, and our regular communications to you. Steps taken include:

•	Capital Purchase Program — In January we received shareholder approval to issue preferred stock. With this approval we sold $23,184,000 in preferred stock and warrants to purchase 469,312 shares of common stock to the U.S. Treasury. This program was offered to strengthen healthy banks. This program increased our regulatory capital from approximately $61,000,000 to approximately $84,000,000. Your board and management believe this strengthened-capital position is important in these uncertain economic times. As we stated previously, this additional capital will provide support if we experience a long and sustained economic downturn with increased loan losses. If our economy recovers quickly, we can repurchase this preferred stock at par after three years.
	Much publicized restrictions of the Capital Purchase Program involve executive compensation. We can report to you that our compensation structure does not come close to any of these restrictions. Our executive compensation is typically at the 50th percentile for companies of our size, we do not have executive bonus or incentive programs, we do not provide personal automobiles or the trips and perks highlighted in news reports. For 2009 there has been a freeze on executive salaries and most salaries of other company employees.
•	Working With Customer Loan Issues - While the large national and regional banks seem to have little flexibility in working with customers that are impacted by the recession, we are dealing with our customers on an individual basis. If our customer has not abandoned their home or business, we want to work with them. When possible, we are renegotiating and modifying loan terms to help the customer through the recession. We believe this is a better alternative than repossession or foreclosure. A short-term cash flow reduction is preferable to attempting to sell repossessed property in a depressed market. Sometimes this is not possible. When this is the case we assess the situation, assess the collateral involved, and make a decision. Sometimes we sell the property for whatever it brings, and we move on. Sometimes we believe there is long-term potential, and we will hold the property to wait for the market to turn around.

• Customer Confidence – We have participated in the Transaction Account Guarantee Program which provides unlimited deposit insurance on non-interest bearing checking accounts and the CDARS program which can provide upwards of $50,000,000 in deposit insurance for customers with multiple Certificate of Deposit accounts. Through January 2009, the CDARS program has brought in over $23,000,000 in new deposit dollars. Coupled with the temporary increase of the FDIC insurance to $250,000, we can provide our customers with a high level of safety and soundness for their accounts. Deposits and deposit customers are our raw material.

• Shareholder Communications – A commitment for 2008 was to provide you with timely and candid information. We have attempted through letters and website postings to provide information on how your company is doing. When shares are held at a broker, we cannot control the timely forwarding of information to you. If your shares are held at a broker and you would like to be on our direct mailing list, complete and return to us the card attached to the annual report.

2009 and Beyond

2009 is going to be a challenging year — perhaps more so than 2008. The current rate environment will place pressure on our interest margin. We are going to see additional loan losses. We will see additional related expenses whether they are expenses to modify loans, repossession expenses, or the estimated $2,600,000 increase in our FDIC premium for 2009, which includes the recently approved one-time emergency special assessment. During these trying times we must keep a balanced perspective. Yes, we do have many customers experiencing significant problems that will take the company’s time, resources, and loan loss reserve dollars to work through, but 95% of our customers are current with their payments. Yes we are seeing unemployment rising in our markets to levels of 10% to 13% — but that means 87% to 90% of our neighbors in the workforce are working.

Our pledge remains to take the steps we deem necessary to get through the recession with the least negative impact to the company. Short-term actions must be taken but it is also a good time for companies to assess where they are at, where they are going, and to be prepared for the turnaround. We are doing exactly that. We are looking at our offices and office needs, staffing, education and training, customer product offerings, marketing efforts, and technology changes. We are focusing on desirable customers currently being ignored by the large banking institutions. We are also focused on our deposit gathering, giving us the raw material needed as the economy turns. And just as it has in the past, it will turn and should offer us the opportunity to prosper.

Very truly yours,

     
     James O. Miller
     President & CEO

ANNUAL REPORT

CONTENTS

Five –Year Selected Consolidated Financial Data	1
Common Stock and Shareholder Matters	5
General Development of Business	5
Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Quantitive and Qualitative Disclosures about Market Risk	21
Financial Statements
Management’s Report on Internal Control over Financial Reporting	25
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Statements	26
Report of Independent Registered Public Accounting Firm on Financial Statements	27
Consolidated Balance Sheets	28
Consolidated Statements of Operations	29
Consolidated Statements of Changes in Shareholders’ Equity	30
Consolidated Statements of Cash Flow	33
Notes to Consolidated Financial Statements	35

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Five-Year Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Year ended December 31,
	2008			2007			2006		2005			2004
Statements of income:
Total interest and dividend income	$	62,267		$	49,947		$	45,876	$	42,438		$	33,836
Total interest expense		21,780			20,371			15,615		11,591			8,163
Net interest income		40,487			29,576			30,261		30,847			25,673
Provision for loan losses		8,207			1,020			1,128		1,123			1,805
Net interest income after provision for loan losses		32,280			28,556			29,133		29,724			23,868
Security gains/(losses)		193			(1	)		—		(13	)		107
Other noninterest income		9,463			7,506			6,670		7,851			6,094
Total noninterest income		9,656			7,505			6,670		7,838			6,201
Goodwill Impairment		43,291			—			—		—			—
Other noninterest expense		36,254			26,163			26,977		27,929			23,332
Total noninterest expense		79,545			26,163			26,977		27,929			23,332
Income (loss) before federal income taxes		(37,609	)		9,898			8,826		9,633			6,737
Federal income tax expense		1,369			3,013			2,666		2,974			1,924
Net income (loss)	$	(38,978	)	$	6,885		$	6,160	$	6,659		$	4,813
Net income excluding impairment charge (1)	$	4,313		$	6,885		$	6,160	$	6,659		$	4,813
Per share of common stock:
Earnings (loss) (basic and diluted)	$	(5.06	)	$	1.25		$	1.12	$	1.15		$	0.92
Earnings (basic and diluted) excluding impairment charge (1)		0.56			1.25			1.12		1.15			0.92
Dividends		0.91			1.12			1.12		1.12			1.08
Book value		9.94			16.37			14.53		15.02			15.19
Average common shares outstanding:
Basic		7,707,917			5,505,023			5,520,692		5,804,361			5,211,904
Diluted		7,707,917			5,505,023			5,520,692		5,805,681			5,216,557
Year-end balances:
Loans, net	$	787,789		$	787,386		$	549,665	$	514,770		$	556,188
Securities		167,159			158,920			119,398		136,674			163,451
Total assets		1,053,611			1,119,257			748,986		750,936			817,510
Deposits		809,921			839,820			564,551		577,105			647,045
Borrowings		155,038			145,051			96,754		81,402			78,322
Shareholders’ equity		76,617			126,156			79,472		87,110			88,213
Average balances:
Loans, net	$	791,298		$	579,025		$	530,409	$	532,620		$	499,284
Securities		163,054			118,542			126,645		150,184			120,088
Total assets		1,099,943			780,769			739,571		780,321			681,644
Deposits		808,646			574,133			566,584		609,564			539,635
Borrowings		162,400			118,375			87,825		80,056			68,110
Shareholders’ equity		123,468			78,435			80,182		86,586			71,422

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Five-Year Selected Ratios

	Year ended December 31,
	2008			2007			2006			2005			2004
Net yield on average interest-earning assets		4.18	%		4.17	%		4.49	%		4.31	%		4.07	%
Return on average total assets		(3.54	)		0.89			0.83			0.85			0.71
Return on average total assets, excluding impairment charge (1)		0.39			0.89			0.83			0.85			0.71
Return on average shareholders’ equity		(31.57	)		8.78			7.68			7.69			6.74
Return on average shareholders’ equity, excluding impairment charge (1)		3.49			8.78			7.68			7.69			6.74
Average shareholders’ equity as a percent of average total assets		11.22			10.05			10.84			11.10			10.48
Net loan charge-offs as a percent of average total loans		0.84			0.52			0.42			0.66			0.43
Allowance for loan losses as a percent of loans at year-end		1.11			0.93			1.45			1.76			2.06
Shareholders’ equity as a percent of total year-end assets		7.27			11.28			10.61			11.60			10.79

⁽¹⁾ Net income (loss) for 2008 has been adjusted for the impairment charge to goodwill. Net income excluding the impairment charge equals net income (loss) for the period plus the impairment charge of $43,291.

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Non-GAAP Financial Measures: Management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate The Corporation’s performance. Specifically, management reviews each of the following before impairment charge; net income, per share earnings (diluted), return on average assets and return on average equity. Net income excluding the impairment charge equals net income for the year plus the impairment charge to goodwill of $43,291. Management believes the adjusted performance metrics present a more reasonable view of the Corporation’s operating performance and ensures comparability of operating performance from period to period. Provided are reconciliations of net income (loss) to net income before impairment charge, net income (loss) per share (diluted) to net income per share (diluted) before impairment charge, return on average assets to return on average assets before impairment charge and return on average equity to return on average equity before impairment charge. These reconciliations are presented to comply with SEC Regulation G and not as an indication that the adjusted performance metrics are a substitute for net income (loss), net income (loss) per share (diluted), return on average assets or return on average equity determined by GAAP.

	Year ended December 31,
	2008			2007			2006			2005			2004
Reconciliation of net income (loss) to net income excluding impairment charge
Net income (loss)	$	(38,978	)	$	6,885		$	6,160		$	6,659		$	4,813
Plus goodwill impairment charge		43,291			—			—			—			—
Net income before impairment charge	$	4,313		$	6,885		$	6,160		$	6,659		$	4,813
Reconciliation of net income (loss) per share (diluted) to net income per share (diluted) excluding impairment charge
Net income (loss) per share	$	(5.06	)	$	1.25		$	1.12		$	1.15		$	0.92
Plus goodwill impairment charge per share		5.62			—			—			—			—
Net income per share before impairment charge	$	0.56		$	1.25		$	1.12		$	1.15		$	0.92
Reconciliation of return on average assets to return on average assets excluding impairment charge
Return on average assets		(3.54	)%		0.89	%		0.83	%		0.85	%		0.71	%
Plus goodwill impairment charge		3.93			—			—			—			—
Return on avg. assets before impairment charge		0.39	%		0.89	%		0.83	%		0.85	%		0.71	%
Reconciliation of return on average equity to return on average equity excluding impairment charge
Return on average equity		(31.57	)%		8.78	%		7.68	%		7.69	%		6.74	%
Plus goodwill impairment charge		35.06			—			—			—			—
Return on avg. equity before impairment charge		3.49	%		8.78	%		7.68	%		7.69	%		6.74	%

3

Stockholder Return Performance

Set forth below is a line graph comparing the five-year cumulative return of First Citizens Banc Corp (FCZA) common stock, based on an initial investment of $100 on December 31, 2003 and assuming reinvestment of dividends, with Standard & Poor’s 500 Index, the Nasdaq Bank Index and the SNL Bank Index. The comparative indices were obtained from Bloomberg and SNL Securities.

A copy of Form 10-K, as filed with the Securities and Exchange Commission, will be furnished, free of charge, to shareholders, upon written request to the Secretary of First Citizens Banc Corp, 100 East Water Street, Sandusky, Ohio 44870.

4

Common Stock and Shareholder Matters

The common shares of First Citizens Banc Corp trade on The NASDAQ Stock Market under the symbol “FCZA”. As of December 31, 2008, there were 7,707,917 shares outstanding held by approximately 1,444 shareholders of record (not including the number of persons or entities holding stock in nominee or street name through various brokerage firms). Information below is the range of sales prices for each quarter for the last two years.

2008

First Quarter	Second Quarter	Third Quarter	Fourth Quarter
$13.20 to $15.50	$11.01 to $14.84	$9.00 to $13.44	$5.37 to $10.12

2007

First Quarter	Second Quarter	Third Quarter	Fourth Quarter
$19.55 to $20.20	$16.68 to $19.89	$17.27 to $18.50	$13.56 to $17.77

Dividends per share declared by the Corporation on common shares were as follows:

	2008		2007
First quarter	$	.28	$	.29
Second quarter		.28		.29
Third quarter		.20		.27
Fourth quarter		.15		.27
	$	0.91	$	1.12

Information regarding potential restrictions on dividends paid can be found in Note 18 to the Consolidated Financial Statements.

General Development of Business
(Dollars in thousands, except for per share data)

FIRST CITIZENS BANC CORP (FCBC) was organized under the laws of the State of Ohio on February 19, 1987 and is a registered financial holding company under the Gramm-Leach-Bliley Financial Modernization Act of 1999, as amended. The Corporation’s office is located at 100 East Water Street, Sandusky, Ohio. The Corporation had total consolidated assets of $1,053,611 at December 31, 2008. FCBC and its subsidiaries are referred to together as the Corporation.

THE CITIZENS BANKING COMPANY (Citizens), owned by the Corporation since 1987, opened for business in 1884 as The Citizens National Bank. In 1898, Citizens was reorganized under Ohio banking law and was known as The Citizens Bank and Trust Company. In 1908, Citizens surrendered its trust charter and began operation under its current name. Citizens maintains its main office at 100 East Water Street, Sandusky, Ohio and operates branch banking offices in the following Ohio communities; Sandusky (2), Norwalk (2), Berlin Heights, Huron, Castalia, New Washington, Shelby (3), Willard, Crestline, Chatfield, Tiro, Greenwich, Plymouth, Shiloh, Akron, Dublin, Hilliard, Plain City, Russells Point, Urbana (2) , West Liberty and Quincy. Additionally, Citizens currently operates a loan production office in Port Clinton, Ohio. In the third quarter of 2008 the Corporation closed its loan production offices located in Marion, Ohio and Marysville, Ohio. Citizens accounts for 99.8% of the Corporation’s consolidated assets at December 31, 2008.

5

SCC RESOURCES INC. (SCC) is organized under the laws of the State of Ohio. Begun as a joint venture of three local Sandusky, Ohio banks in 1966, SCC provides item-processing services for financial institutions, including Citizens, and other nonrelated entities. The Corporation acquired total ownership of SCC in February 1993. This subsidiary accounts for less than one percent of the Corporation’s consolidated assets as of December 31, 2008.

FIRST CITIZENS INSURANCE AGENCY INC. (Insurance Agency) was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Assets of the Insurance Agency are less than one percent of the Corporation’s consolidated assets as of December 31, 2008.

WATER STREET PROPERTIES (Water St.) was formed to hold properties repossessed by FCBC subsidiaries. Water St. accounted for less than one percent of the Corporation’s consolidated assets as of December 31, 2008.

FIRST CITIZENS INVESTMENTS, INC (FCI) is wholly-owned by Citizens to hold and manage its securities portfolio. The operations of FCI are located in Wilmington, Delaware.

FIRST CITIZENS CAPITAL LLC (FCC) is wholly-owned by Citizens to hold inter-company debt that is eliminated in consolidation. The operations of FCC are located in Wilmington, Delaware.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — As of December 31, 2008 and December 31, 2007 and for the Years Ending December 31, 2008, 2007 and 2006

(Dollars in thousands, except per share data)

General

The following paragraphs more fully discuss the significant highlights, changes and trends as they relate to the Corporation’s financial condition, results of operations, liquidity and capital resources as of December 31, 2008 and 2007, and during the three-year period ended December 31, 2008. This discussion should be read in conjunction with the Consolidated Financial Statements and notes to the Consolidated Financial Statements, which are included elsewhere in this report.

Forward-Looking Statements

This report includes forward-looking statements by the Corporation relating to such matters as anticipated operating results, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Such statements are based upon the current beliefs and expectations of the Corporation’s management and are subject to risks and uncertainties. While the Corporation believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could prove to be inaccurate, and accordingly, actual results and experience could differ materially from the anticipated results or other expectations expressed by the Corporation in its forward-looking statements. Factors that could cause actual results or experience to differ from results discussed in the forward-looking statements include, but are not limited to, regional and national economic conditions; volatility and direction of market interest rates; credit risks of lending activities, governmental legislation and regulation, including changes in accounting regulation or standards; material unforeseen changes in the financial condition or results of operations of the Corporation’s clients; and other risks identified from time-to-time in the Corporation’s other public documents on file with the Securities and Exchange Commission.

The Corporation is not aware of any trends, events or uncertainties that will have or are reasonably likely to have a material effect on its liquidity, capital resources or operations except as discussed herein. The Corporation is not aware of any current recommendations by regulatory authorities that would have

6

such effect if implemented. The Corporation does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements, and the purpose of this section is to secure the use of the safe harbor provisions.

Financial Condition

At December 31, 2008, total assets were $1,053,611, compared to $1,119,257 at December 31, 2007. The decrease in assets is primarily the result of a $43,291 impairment charge to goodwill. Additionally, federal funds sold decreased by $18,408 from the end of the year 2007. The decrease in federal funds sold is reflective of decreases in deposits. Other factors contributing to the decrease in assets are discussed in the following sections.

At $787,789, net loans are nearly unchanged from December 31, 2007, up only 0.1%. The mix of the loan portfolio did shift in 2008. Growth in Commercial and Commercial Real Estate of $26,985 was offset by a decline in Residential Real Estate, Real Estate Construction and Consumer loans by $23,000. The decline in the consumer loan portfolio has continued largely due to products such as same as cash loans and other lending alternatives in the market place that are being used by consumers rather than the traditional consumer lending that the Corporation offers. These changes were also the product of management’s approach over the last half of the year. Our focus became more about asset quality and less about loan growth. Some of the changes we made were to reduce the loan-to-value requirement on new Commercial loans, changed collateral value limits on certain new Agricultural loans and reduced loan-to-value limits on residential Home Equity Lines of Credit. We also refocused on selling fixed rate mortgages on the secondary market, rather than booking them into the portfolio. While the primary goal was to try to improve asset quality, a secondary result was that these measures helped preserve liquidity.

Year-end deposit balances totaled $809,921 in 2008 compared to $839,820 in 2007, a decrease of $29,899, or 3.6%. Non-interest bearing demand and savings accounts decreased by $15,783 and $23,151, respectively, from 2007 to 2008, while interest bearing demand and time deposit accounts increased by $3,951 and $5,084, respectively, from 2007 to 2008. A primary factor of the decline in deposits, especially savings, can be attributed to the decline in the economy, as customers have been using savings to pay down their debt. Average deposit balances for 2008 were $808,646 compared to $574,133 for 2007, an increase of 40.8%. Non-interest bearing deposits averaged $124,541 for 2008, compared to $89,171 for 2007, increasing $35,370, or 39.7%. Savings, NOW, and MMIA accounts averaged $356,603 for 2008 compared to $250,938 for 2007. Average certificates of deposit increased $93,478 to total an average balance of $234,024 for 2007. All of the increase in average balances was the result of the mergers with Champaign National Bank and Miami Valley Bank.

Borrowings from the Federal Home Loan Bank of Cincinnati were $69,982 at December 31, 2008. The detail of these borrowings can be found in Note 9 to the Consolidated Financial Statements. The increase of $5,512 from year-end 2007 was primarily the result an additional $5,000 long-term FHLB advance in the first quarter of 2008. The term on the advance is eighty-four months and has a fixed rate of 2.84%, and is callable after thirty-six months.

FCBC has a secured borrowing agreement with Key Bank, NA for up to $25,000. The agreement is split into two pieces; a $15,000 secured revolving line of credit which matures November 29, 2012, and a $10,000 term loan. The term loan matures November 29, 2012 and will require a $5,000 balloon principal payment. At December 31, 2008, $11,500 was outstanding on the line of credit balance and the term loan balance was $9,000. The interest rate is three month LIBOR plus 1.15%, or 3.15% at December 31, 2008 and adjusts quarterly. The borrowings are secured by 100% of the common stock of Citizens. Subsequent to December 31, 2008, the Corporation repaid these borrowings in full.

7

Citizens offers repurchase agreements in the form of sweep accounts to commercial checking account customers. Total repurchase agreements in the form of sweep accounts totaled $31,143 at December 31, 2008 compared to $27,395 at December 31, 2007. Obligations of U.S. government agencies maintained under Citizens’ control are pledged as collateral for the repurchase agreements.

Securities available for sale increased a total of $6,585, or 4.6% from $144,351 on December 31, 2007 to $150,936 on December 31, 2008. U.S. Treasury securities and obligations of U.S. government agencies decreased $19,212, from $95,723 at December 31, 2007 to $76,511 at December 31, 2008. Obligations of states and political subdivisions available for sale increased $6,232 from 2007 to 2008. Mortgage-backed securities increased by $19,370 to total $39,076 at December 31, 2008. The Corporation continued utilizing letters of credit from the Federal Home Loan Bank (FHLB) to replace maturing securities that were pledged for public entities. As of December 31, 2008, the Corporation was in compliance with all pledging requirements.

Mortgage-backed securities totaled $39,076 at December 31, 2008 and none are considered unusual or “high risk” securities as defined by regulating authorities. Of this total, $34,579 are pass-through securities issued by the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) and $4,497 are collateralized by mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or Government National Mortgage Association (GNMA). The average interest rate of the mortgage-backed portfolio at December 31, 2008 was 5.79%. The average maturity at December 31, 2008 was approximately 9.55 years. The Corporation has not invested in any derivative securities.

Securities available for sale had an estimated fair value at December 31, 2008 of $150,936. This fair value includes unrealized gains of approximately $2,696 and unrealized losses of approximately $320. Net unrealized gains totaled $2,376 on December 31, 2008 compared to net unrealized gains of $944 on December 31, 2007. The change in unrealized gains is primarily due to changes in market interest rates. Note 3 to the Consolidated Financial Statements provides more information on unrealized gains and losses.

Premises and equipment, net of accumulated depreciation, decreased $597 from December 31, 2007 to December 31, 2008. The decrease in office premises and equipment is attributed to new purchases of $823, depreciation of $1,986 and disposals of $153. Premises and equipment, net, held for sale totaling $719 at December 31, 2007 consisted of a closed branch in Norwalk, Ohio. This building is currently being used as a storage facility and was returned to the fixed asset portfolio in 2008.

Total shareholders’ equity decreased $49,539, or 39.3% during 2008 to $76,617. Net losses of $38,978 were the largest piece of the decline in equity. The loss can be further broken down into operating earnings of $4,313 and goodwill impairment charge of $43,291. The decline in equity is also made up of dividends paid of $7,014 and the increase in the market value of securities available for sale, net of tax, of $945. The remaining change in shareholders’ equity consisted of the change in the Corporation’s pension liability, net of tax of ($4,492). For further explanation of these items, see Note 1 and Note 14 to the Consolidated Financial Statements. The Corporation paid a cash dividend on February 1, 2008 and May 1, 2008 at a rate of $.28 per share, on August 1, 2008 at a rate of $.20 per share and November 1, 2008, at a rate of $.15 per share. Total outstanding shares at December 31, 2008 were 7,707,917. The ratio of total shareholders’ equity to total assets was 7.3% at December 31, 2008 compared to 11.3% at December 31, 2007.

Results of Operations

The operating results of the Corporation are affected by general economic conditions, the monetary and fiscal policies of federal agencies and the regulatory policies of agencies that regulate financial institutions. The Corporation’s cost of funds is influenced by interest rates on competing investments and general market rates of interest. Lending activities are influenced by the demand for real estate loans

8

and other types of loans, which in turn is affected by the interest rates at which such loans are made, general economic conditions and the availability of funds for lending activities.

The Corporation’s net income primarily depends on its net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and securities, and interest expense incurred on interest-bearing liabilities, such as deposits and borrowings. The level of net interest income is dependent on the interest rate environment and the volume and composition of interest-earning assets and interest-bearing liabilities. Net income is also affected by provisions for loan losses, service charges, gains on the sale of assets, other income, noninterest expense and income taxes.

Comparison of Results of Operations for the Year Ended December 31, 2008 and December 31, 2007

Net Income (Loss)

The Corporation’s net loss for the year ended December 31, 2008 was $38,978, compared to net income of $6,885 for the year ended December 31, 2007. The net loss in 2008 would have been net income of $4,313 without the goodwill impairment of $43,291. The change in net income was the result of the items discussed in the following sections.

Net Interest Income

Net interest income for 2008 was $40,487, an increase of $10,911, or 36.9% from 2007. The change in net interest income for 2008 was the result of an increase in interest income on earning assets of $12,320 from 2007. Average earning assets increased 36.5 percent from 2007 from a combination of organic growth and an acquisition. Average loans increased 36.2 percent over 2007, mainly due to the acquisition of Futura Banc Corporation. This increase was partially offset by an increase in interest expense on interest-bearing liabilities of $1,409. Average balances in time deposits increased 40.3 percent from 2007, mainly due to the acquisition of Futura Banc Corporation and the assumption of deposits from Miami Valley Bank. The Corporation continues to examine its rate structure to ensure that its interest rates are competitive and reflective of the current rate environment in which it competes.

Total interest income increased $12,320, or 24.7% for 2008. The increase in income was a result of the increase in volume on the interest earning assets. Average loans increased $212,524 from 2007 to 2008. Interest earned on the Corporation’s loan portfolio grew as the increase in average balances offset the decline in yield of 73 basis points. The average balance of the securities portfolio for 2008 compared to 2007 increased $40,118, mainly due to the acquisition of Futura Banc Corporation. Interest earned on the security portfolio, including bank stocks, increased mainly due to the increase in average balances. Average balances of Federal Funds sold and interest-bearing deposits in other banks increased $2,015.

Total interest expense increased $1,409, or 6.9% for 2008 compared to 2007. The increase in interest expense can be attributed to an increase volume on average interest-bearing liabilities offset by a decline in the rate paid. Total average balance of interest-bearing liabilities increased $243,168 while the average rate decreased 81 basis points in 2008. Average interest-bearing deposits increased $199,143 from 2007 to 2008. The increase in average interest-bearing deposits offset by a decline in rate of approximately 65 basis points caused interest expense on deposits to increase $1,318. Interest expense on FHLB borrowings decreased $57 due primarily to the decrease in rate paid on the borrowings of 99 basis points. The average balance in subordinated debenture increased $4,397 from 2007 to 2008, but the rate on these securities decreased 114 basis points, resulting in a decrease in interest expense of $43. The increase in subordinated debentures is the result of the Corporation acquiring two additional trust preferred securities as part of the Futura acquisition. Other borrowings increased in balance from $29,102 in 2007 to $56,427 in 2008. The increase in other borrowings is mainly the result of the Corporation securing a borrowing agreement with Key Bank, NA. At December 31, 2008, $20,500 was outstanding on the borrowing. The additional borrowings resulted in an increase in interest expense of $191.

9

Refer to “Distribution of Assets, Liabilities and Shareholders’ Equity, Interest Rates and Interest Differential” and “Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rate” on pages 16 through 18 for further analysis of the impact of changes in interest-bearing assets and liabilities on the Corporation’s net interest income.

Provision and Allowance for Loan Losses

The following table contains information relating to the provision for loan losses, activity in and analysis of the allowance for loan losses as of and for each of the three years in the period ended December 31, 2008.

	As of and for year ended
	December 31,
	2008			2007			2006
Net loan charge-offs	$	6,719		$	2,983		$	2,280
Provision for loan losses charged to expense		8,207			1,020			1,128
Net loan charge-offs as a percent of average outstanding loans		0.84	%		0.52	%		0.42	%
Allowance for loan losses	$	8,862		$	7,374		$	8,060
Allowance for loan losses as a percent of year-end outstanding loans		1.11	%		0.93	%		1.45	%
Allowance for loan losses as a percent of impaired loans		60.55	%		56.88	%		48.13	%
Impaired loans	$	14,637		$	12,965		$	16,746
Impaired loans as a percent of gross year-end loans (1)		1.84	%		1.64	%		3.00	%
Nonaccrual and 90 days or more past due loans as a percent of gross year-end loans (1)		2.64	%		1.48	%		1.85	%

⁽¹⁾ Nonperforming loans and impaired loans are defined differently. Some loans may be included in both categories, whereas other loans may only be included in one category.

The Corporation’s policy is to maintain the allowance for loan losses at a level sufficient to provide for probable losses incurred in the current portfolio. Management’s periodic evaluation of the adequacy of the allowance is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying collateral and current economic conditions.

The Corporation provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required on the allowance for loan losses. Provisions for loan losses totaled $8,207, $1,020, and $1,128, in 2008, 2007 and 2006, respectively. The Corporation’s provision for loan losses increased during 2008 in conjunction with an increase in the Corporation’s level of non-performing loans resulting from a rapid deterioration in local economic conditions. Impaired loans at December 31, 2008 were $14,637 or 1.8 percent of gross year-end loans, compared to $12,925 or 1.6 percent of gross loans outstanding at December 31, 2007. In addition, nonaccrual and 90 days or more past due loans as a percent of gross loans were 2.6 percent at December 31, 2008 compared to 1.4 percent at December 31, 2007.

Efforts are continually made to examine both the level and mix of the allowance by loan type as well as the overall level of the allowance. Management specifically evaluates loans that are impaired, or graded as doubtful by the internal grading function for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for pools of similar loans, historical reserve allocations

10

and current economic factors. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for loan losses.

Management analyzes commercial and commercial real estate loans, with balances of $350 or larger, on an individual basis and classifies a loan as impaired when an analysis of the borrower’s operating results and financial condition indicates that underlying cash flows are not adequate to meet its debt service requirements. Often this is associated with a delay or shortfall in payments of 90 days or more. In addition, loans held for sale and leases are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans or portions thereof, are charged-off when deemed uncollectible.

Noninterest Income

Noninterest income totaled $9,656 in 2008 compared to $7,505 in 2007, an increase of 28.6%. In addition to the increase related to the 2007 mergers, the significant items contributing to this change are as follows.

Service charges paid to Citizens increased $1,221 compared to 2007, the increased revenues were primarily due to higher volumes in deposit accounts from acquisitions. Revenue from computer operations decreased in 2008, down $132 from 2007 due to a decrease in the number of financial institutions for which processing is provided. Revenue from bank owned life insurance decreased $41 in 2008 compared to the same period in 2007. Sales of other real estate owned resulted in recognized losses of $313 in 2008 compared to losses of $243 for 2007. The disposal of premises and equipment in 2008 resulted in a loss of $137 compared to losses of $64 for 2007, which led to an increase of $73 from last year.

Noninterest Expense

Noninterest expense totaled $79,545 in 2008, an increase of $53,382, or 204.0% over 2007. The following discussion highlights the significant items that resulted in increases or decreases in the components of noninterest expense.

Salaries and wages totaled $14,388 in 2008 compared to $10,908 in 2007 for an increase of $3,480. The increase in salaries was attributable to an increase of approximately 37 full-time equivalent employees compared to 2007. In addition, approximately $137 of severance cost relating to branch restructuring and loan production office closures were posted in the third quarter of 2008. Employees increased due to the acquisition of Futura Banc Corporation and the assumption of deposits of Miami Valley Bank in the fourth quarter of 2007. The Corporation subsequently purchased one of Miami Valley’s branch banking offices, and retained the employees of that branch. The Corporation’s self-insured health plan costs decreased $169 in 2008, as the Corporation continues to monitor and adapt the plan to better manage the continued increases in medical costs. The Corporation’s pension plan expenses decreased $607 in 2008 compared to 2007. This decrease was due to a plan amendment that prevents new employees from entering the defined benefit plan of the Corporation after January 1, 2007. The decrease was also due to settlement expenses in 2007 that we did not have in 2008.

Net occupancy expense increased $914 from $1,432 in 2007 to $2,346. The increase was a result of the acquisition of Futura Banc Corporation and subsequent purchase of one of Miami Valley’s branch banking offices.

Equipment expense increased $1,057 as a result of the acquisition of Futura Banc Corporation and subsequent purchase of one of Miami Valley’s branch banking offices. In addition, new equipment purchases by SCC to replace and update proof and image capabilities contributed to the increase as well.

Computer processing expense increased by $346 compared to last year primarily due to conversion costs associated with acquisitions.

11

State franchise taxes increased $259 in 2008 compared to 2007. This increase is attributable to the acquisitions in 2007.

Professional services expenses increased for 2008 compared to 2007 by $706. The primary cause of this increase is due to merger related audit fees, increased post merger legal fees associated with lending and collection activities and from consulting fees for employment searches.

Other expense increased in 2008 compared to 2007 by $46,542. The large increase includes $43,291 for goodwill impairment charges. Excluding the goodwill impairment charge, other expenses increased $3,251 in 2008. Amortization of intangible assets increased $735 from 2007, due to an increase in intangible assets, which is the result of the merger with Futura and acquisition of deposits from Miami Valley Bank. Other operating expense increases were primarily a result of merger, integration and restructuring charges recognized from the acquisition of Futura Banc Corporation.

The FDIC board agreed to impose an emergency special assessment of 20 basis points on all banks to restore the Deposit Insurance Fund to an acceptable level. The assessment, which will be payable on September 30, 2009 is in addition to a planned increase in premiums and a change in the way regular premiums are assessed which the board also approved at its Friday morning meeting. The Corporations expects the impact of the emergency special assessment will be material.

Income Tax Expense

Income before federal income taxes amounted to ($37,609) in 2008 and 9,898 in 2007. The Corporation’s effective income tax rate for 2008 was (3.5%) as a result of the non-tax deductible goodwill impairment. Without the goodwill impairment, the 2008 effective tax rate would have been 24.4%, compared to 30.4% in 2007.

Comparison of Results of Operations for the Year Ended December 31, 2007 and December 31, 2006

Net Income

The Corporation’s net income for the year ended December 31, 2007 was $6,885, compared to $6,160 for the year ended December 31, 2006, an increase of $725 or 11.8%. The increase in net income was the result of the items discussed in the following sections.

Net Interest Income

Net interest income for 2007 was $29,576, a decrease of $685, or 2.3% from 2006. The change in net interest income for 2007 was the result of an increase in interest income on earning assets of $4,071 from 2006, or 33 basis points. This increase was offset by an increase in rate paid on interest-bearing liabilities of $4,756, or 60 basis points. Average balances in time deposits increased $11,544 and the yield on these deposits increased 71 basis points from 2006. The Corporation continues to examine its rate structure to ensure that its interest rates are competitive and reflective of the current rate environment in which it competes.

Total interest income increased $4,071, or 8.9% for 2007. The increase in income was a result of the increase in volume on the interest earning assets. Average loans increased $47,648 from 2006 to 2007. Interest earned on the Corporation’s loan portfolio grew as the increase in average balances offset the decline in yield of 4 basis points. The average balance of the securities portfolio for 2007 compared to 2006 decreased $8,103. Interest earned on the security portfolio, including bank stocks, increased due to the decrease in volume offsetting a increase in rate earned on these assets of 93 basis points. Average balances of Federal Funds sold and interest-bearing deposits in other banks decreased $2,468.

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Total interest expense increased $4,756, or 30.5% for 2007 compared to 2006. The increase in interest expense can be attributed to an increase in the both the rate and volume on average interest-bearing liabilities. Total average balance of interest-bearing liabilities increased $41,310 while the average rate increased 60 basis points in 2007. Average interest-bearing deposits increased $10,760 from 2006 to 2007. The increase in rate of approximately 56 basis points caused interest expense on deposits to increase $2,967. Interest expense on FHLB borrowings increased $1,767 due primarily to the increase in rate paid on the borrowings of 92 basis points, along with an increase in balance of $28,803. The average balance in subordinated debenture increased $178 from 2006 to 2007, but the rate on these securities decreased 17 basis points, resulting in a decrease in expense of $32. Other borrowings increased in balance from $27,533 in 2006 to $29,102 in 2007. The rate on these borrowings also increased, resulting in an increase in expense of $54.

Refer to “Distribution of Assets, Liabilities and Shareholders’ Equity, Interest Rates and Interest Differential” and “Changes in Interest Income and Interest Expense Resulting from Changes in Volume and Changes in Rate” on pages 16 through 18 for further analysis of the impact of changes in interest-bearing assets and liabilities on the Corporation’s net interest income.

Provision and Allowance for Loan Losses

The following table contains information relating to the provision for loan losses, activity in and analysis of the allowance for loan losses as of and for each of the three years in the period ended December 31, 2007.

	As of and for year ended
	December 31,
	2007			2006			2005
Net loan charge-offs	$	2,983		$	2,280		$	3,617
Provision for loan losses charged to expense		1,020			1,128			1,123
Net loan charge-offs as a percent of average outstanding loans		0.52	%		0.42	%		0.66	%
Allowance for loan losses	$	7,374		$	8,060		$	9,212
Allowance for loan losses as a percent of year-end outstanding loans		0.93	%		1.45	%		1.76	%
Allowance for loan losses as a percent of impaired loans		56.88	%		48.13	%		67.39	%
Impaired loans	$	12,965		$	16,746		$	13,669
Impaired loans as a percent of gross year-end loans (1)		1.64	%		3.00	%		2.61	%
Nonaccrual and 90 days or more past due loans as a percent of gross year-end loans (1)		1.48	%		1.85	%		2.81	%

⁽¹⁾ Nonperforming loans and impaired loans are defined differently. Some loans may be included in both categories, whereas other loans may only be included in one category.

The Corporation’s policy is to maintain the allowance for loan losses at a level sufficient to provide for probable losses incurred in the current portfolio. Management’s periodic evaluation of the adequacy of the allowance is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying collateral and current economic conditions.

The Corporation provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required

13

on the allowance for loan losses. Provisions for loan losses totaled $1,020, $1,128, and $1,123, in 2007, 2006 and 2005, respectively. The Corporation’s provision for loan losses declined during 2007 in conjunction with a decline in the Corporation’s level of non-performing loans. Impaired loans at December 31, 2007 were $12,925 or 1.6 percent of gross year-end loans, compared to $16,746 or 3.0 percent of gross loans outstanding at December 31, 2006. In addition, nonaccrual and 90 days or more past due loans as a percent of gross loans were 1.4 percent at December 31, 2007 compared to 1.8 percent at December 31, 2006.

Efforts are continually made to examine both the level and mix of the allowance by loan type as well as the overall level of the allowance. Management specifically evaluates loans that are impaired, or graded as doubtful by the internal grading function for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for pools of similar loans, historical reserve allocations and current economic factors. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for loan losses.

Management analyzes commercial and commercial real estate loans, with balances of $350 or larger, on an individual basis and classifies a loan as impaired when an analysis of the borrower’s operating results and financial condition indicates that underlying cash flows are not adequate to meet its debt service requirements. Often this is associated with a delay or shortfall in payments of 90 days or more. In addition, loans held for sale and leases are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans or portions thereof, are charged-off when deemed uncollectible.

Noninterest Income

Noninterest income totaled $7,505 in 2007 compared to $6,670 in 2006, an increase of 12.5%. The significant items contributing to this change are as follows.

Service charges paid to Citizens increased $335 compared to 2006, primarily due to two reasons. Citizens revamped personal checking account offerings in December 2006, which include value added features. Citizens also provided a re-disclosure of its Check Protect Policy in the third quarter of 2006. Both of these enhancements led to increased product usage and associated fees. Revenue from computer operations decreased in 2007, down $50 from 2006 due to a decrease in the number of financial institutions for which processing is provided. Revenue from bank owned life insurance increased $184 in 2007 compared to the same period in 2006. The Corporation purchased $10,000 of bank owned life insurance late in the second quarter of 2006. Sales of other real estate owned resulted in recognized losses of $243 in 2007 compared to losses of $663 for 2006. The sale of premises and equipment in 2007 resulted in a small loss of $64 compared to the sale of a building that had been used as a storage facility for a $148 gain in 2006, which led to a decrease of $212 from last year.

Noninterest Expense

Noninterest expense totaled $26,163 in 2007, a decrease of $814, or 3.0% over 2006. The following discussion highlights the significant items that resulted in increases or decreases in the components of noninterest expense.

Salaries and wages totaled $10,908 in 2007 compared to $11,246 in 2006 for a decrease of $338. The decrease in salaries was attributable to a decrease in wage expense for deferred loan costs. The Corporation’s self-insured health plan costs decreased $115 in 2007, as the Corporation continues to monitor and adapt the plan to better manage the continued increases in medical costs. The Corporation’s pension plan expenses decreased $107 in 2007 compared to 2006. This decrease was due to a plan amendment that prevents new employees from entering the defined benefit plan of the Corporation after January 1, 2007.

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Net occupancy expense decreased $8 from $1,440 in 2006 to $1,432. The reduction was a result of reduced building repairs and maintenance.

Equipment expense increased $14 as a result of new equipment purchases by SCC to replace and update proof and image capabilities.

Computer processing expense decreased by $35 compared to last year primarily due to the Corporation renegotiating its contract with its service provider.

State franchise taxes increased $139 in 2007 compared to 2006. In 2006 Citizens paid a special dividend to the holding company for a tender offer, which reduced its state franchise tax liability.

Professional services expenses decreased for 2007 compared to 2006 by $388. The primary cause of this decrease is due to legal costs paid to complete the tender offer in the first quarter of 2006. Additional increases in legal costs were also recognized due to the restructuring of one commercial credit in 2006. Also, an increase in legal fees paid to handle an increase in foreclosure work at Citizens was experienced in 2006.

ATM expense and stationery and supplies increased in 2007. ATM expense increased $69 compared to 2006. Stationery and supplies increased $62 from 2006. In 2007, Citizens began to use “Citizens Bank”, along with a brand mark, as part of a branding initiative. As a result of this change, items such as letterhead, envelopes, teller stamps and other items needed to be reordered.

Other expense increased in 2007 compared to 2006 by $64. The primary reason for this increase was due to an increase of $59 in amortization of intangible assets, which is the result of the merger with Futura and acquisition of deposits from Miami Valley Bank. In addition, courier expense increased $13 from 2006. This increase is also the result of the merger with Futura.

Income Tax Expense

Income before federal income taxes amounted to $9,898 in 2007 and $8,826 in 2006. The Corporation’s effective income tax rate for 2007 remained relatively unchanged from a year ago. The 2007 effective tax rate was 30.4%, compared to 30.2% in 2006.

15

Distribution of Assets, Liabilities and Shareholders’ Equity,
Interest Rates and Interest Differential

The following table sets forth, for the years ended December 31, 2008, 2007 and 2006, the distribution of assets, including interest amounts and average rates of major categories of interest-earning assets and interest-bearing liabilities (Dollars in thousands):

	2008								2007								2006
	Average					Yield/			Average					Yield/			Average					Yield/
Assets	balance			Interest		rate			balance			Interest		rate			balance			Interest		rate
Interest-earning assets:
Loans (1)(2)(3)	$	799,413		$	54,116		6.77	%	$	586,889		$	43,999		7.50	%	$	539,241		$	40,637		7.54	%
Taxable securities (4)		131,800			6,743		5.15	%		101,933			5,045		4.65	%		106,942			4,113		3.56	%
Non-taxable securities (4)(5)		31,254			1,270		4.07	%		16,609			673		4.06	%		19,703			814		4.21	%
Federal funds sold		3,139			52		1.66	%		3,561			151		4.24	%		6,076			278		4.58	%
Interest-bearing deposits in other banks		3,076			86		2.76	%		639			79		12.36	%		592			34		5.74	%
Total interest-earning assets		968,682			62,267		6.42	%		709,631			49,947		7.15	%		672,554			45,876		6.82	%
Noninterest-earning assets:
Cash and due from financial institutions		20,922								14,821								16,956
Premises and
equipment, net		21,863								12,003								11,841
Accrued interest receivable		6,820								5,190								4,703
Intangible assets		74,489								29,213								29,744
Other assets		4,166								7,174								6,248
Bank owned life insurance		11,116								10,601								6,357
Less allowance for loan losses		(8,115	)							(7,864	)							(8,832	)
Total	$	1,099,943							$	780,769							$	739,571

(1)	For purposes of these computations, the daily average loan amounts outstanding are net of unearned income and include loans held for sale.
(2)	Included in loan interest income are loan fees of $483 in 2008, $225 in 2007 and $1,051 in 2006.
(3)	Non-accrual loans are included in loan totals and do not have a material impact on the analysis presented.
(4)	Average balance is computed using the carrying value of securities. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.
(5)	Interest income is reported on a historical basis without tax-equivalent adjustment.

16

Distribution of Assets, Liabilities and Shareholders’ Equity,
Interest Rates and Interest Differential (Continued)

The following table sets forth, for the years ended December 31, 2008, 2007 and 2006, the distribution of liabilities and shareholders’ equity, including interest amounts and average rates of major categories of interest-earning assets and interest-bearing liabilities (Dollars in thousands):

	2008							2007							2006
Liabilities and	Average				Yield/			Average				Yield/			Average				Yield/
Shareholders' Equity	balance		Interest		rate			balance		Interest		rate			balance		Interest		rate
Interest-bearing liabilities:
Savings and interest- bearing demand accounts	$	356,603	$	4,060		1.14	%	$	250,938	$	4,021		1.60	%	$	251,722	$	3,119		1.24	%
Certificates of deposit		327,502		11,316		3.46	%		234,024		10,037		4.29	%		222,480		7,973		3.58	%
Federal Home Loan Bank advances		77,563		3,131		4.04	%		63,321		3,188		5.03	%		34,518		1,420		4.11	%
Securities sold under repurchase agreements		31,700		548		1.73	%		23,133		941		4.07	%		19,000		769		4.05	%
Notes payable		21,074		947		4.49	%		4,624		318		6.88	%		7,367		455		6.18	%
Subordinated debentures		30,349		1,748		5.76	%		25,952		1,791		6.90	%		25,774		1,823		7.07	%
U.S. Treasury demand notes payable		1,714		30		1.17	%		1,345		75		5.58	%		1,166		56		4.80	%
Total interest- bearing liabilities		846,505		21,780		2.57	%		603,337		20,371		3.38	%		562,027		15,615		2.78	%
Noninterest-bearing liabilities:
Demand deposits		124,541							89,171							92,382
Other liabilities		5,429							9,826							4,980
		129,970							98,997							97,362
Shareholders’ equity		123,468							78,435							80,182
Total	$	1,099,943						$	780,769						$	739,571
Net interest income and interest rate spread			$	40,487		3.85	%			$	29,576		3.77	%			$	30,261		4.04	%
Net yield on interest- earning assets						4.18	%						4.17	%						4.49	%

17

Changes in Interest Income and Interest Expense
Resulting from Changes in Volume and Changes in Rate

The following table sets forth, for the periods indicated, a summary of the changes in interest income and interest expense resulting from changes in volume and changes in rate.

	2008 compared to 2007									2007 compared to 2006
	Increase (decrease) due to:									Increase (decrease) due to:
	Volume(1)			Rate(1)			Net			Volume(1)			Rate(1)			Net
							(Dollars in thousands)
Interest income:
Loans	$	14,713		$	(4,597	)	$	10,116		$	3,573		$	(211	)	$	3,362
Taxable securities		1,549			150			1,699			(238	)		1,170			932
Nontaxable securities		598			—			598			(113	)		(28	)		(141	)
Federal funds sold		(16	)		(83	)		(99	)		(108	)		(19	)		(127	)
Interest-bearing deposits in other banks		107			(101	)		6			3			42			45
Total interest-earning assets	$	16,951		$	(4,631	)	$	12,320		$	3,117		$	954		$	4,071
Interest expense:
Savings and interest-bearing demand accounts		1,403			(1,364	)		39			(10	)		913			903
Certificates of deposit		3,485			(2,206	)		1,279			431			1,633			2,064
Federal Home Loan Bank advances		642			(689	)		(47	)		1,394			373			1,767
Securities sold under repurchase agreements		270			(663	)		(393	)		168			4			172
Note payable		774			(145	)		629			(184	)		47			(137	)
Subordinated debentures		278			(321	)		(43	)		13			(45	)		(32	)
U.S. Treasury demand notes payable		16			(71	)		(55	)		9			10			19
Total interest-bearing liabilities	$	6,868		$	(5,459	)	$	1,409		$	1,821		$	2,935		$	4,756
Net interest income	$	10,083		$	828		$	10,911		$	1,296		$	(1,981	)	$	(685	)

(1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

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Liquidity and Capital Resources

Citizens maintains a conservative liquidity position. All securities are classified as available for sale. At December 31, 2008, securities with maturities of one year or less, totaled $8,141, or 5.6%, of the total security portfolio. The available for sale portfolio helps to provide the Corporation with the ability to meet its funding needs. The Consolidated Statements of Cash Flows contained in the Consolidated Financial Statements detail the Corporation’s cash flows from operating activities resulting from net earnings.

Cash from operations for 2008 was $19,812. The primary additions to cash from operating activities are from changes in other assets, changes in accrued interest receivables, amortization of intangible assets, the provision for loan losses and depreciation. The goodwill impairment charge of $43,291 in 2008 did not impact cash and as a result had no impact on cash provided by operating activities. Cash from investing activities was $2,503 in 2008. Security purchases and increases in loans were offset by security maturities and a decrease in fed funds sold. Cash from financing activities in 2008 totaled $(23,011). The primary uses of cash in financing activities include the run-off of deposits, the payment of dividends and the change in note payables. The cash from financing activities included long-term FHLB borrowings, changes in securities sold under repurchase agreements, cash received in deposit acquisition and changes in U.S. Treasury interest-bearing demand notes payable. Cash from operating and investing activities was less than cash used by financing activities by $696, which resulted in a decrease in cash and cash equivalents to $26,649.

Future loan demand of Citizens can be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, the issuances of trust preferred obligations, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the Federal Home Loan Bank (FHLB). As of December 31, 2008, Citizens had total credit availability with the FHLB of $160,798 of which $69,982 was outstanding.

On a separate entity basis, the Corporation’s primary source of funds is dividends paid primarily by Citizens. Generally, subject to applicable minimum capital requirements, Citizens may declare a dividend without the approval of the Federal Reserve Bank of Cleveland and the State of Ohio Department of Commerce, Division of Financial Institutions, provided the total dividends in a calendar year do not exceed the total of its profits for that year combined with its retained profits for the two preceding years. In 2008, Citizens paid $11,576 in dividends to the Corporation, which accumulated cash at the Corporation to be used for general corporate purposes including funding payments on borrowings at the holding company level. At December 31, 2008, Citizens is unable to pay dividends to the Corporation without obtaining regulatory approval.

In addition to the restrictions placed on dividends by banking regulations, on January 23, 2009, the Corporation completed the issuance of $23 million of perpetual preferred stock and related warrants under the U.S. Department of Treasury’s voluntary Capital Purchase Program (CPP). The Board and Management believe that while the Corporation was “Well Capitalized” under regulatory guidelines prior to the capital addition, in the currently uncertain economic environment it was prudent to further strengthen the Corporation’s capital position. Pursuant to our participation in the CPP, dividends paid on common stock cannot be increased nor can common shares be repurchased without the Treasury’s consent until the earlier of, the Corporation redeems all of those shares, the third anniversary of the date of the perpetual stock or the Treasury has transferred them to third parties.

The Corporation manages its liquidity and capital through quarterly Asset/Liability Committee (ALCO) meetings. The ALCO discusses issues like those in the above paragraphs as well as others that will affect future liquidity and capital position of the Corporation. The ALCO also examines interest rate risk and the effect that changes in rates will have on the Corporation. For more information about interest rate risk, please refer to the “Quantitative and Qualitative Disclosures about Market Risk” section.

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Capital Adequacy

The Corporation’s policy is, and always has been, to maintain its capital levels above the well capitalized regulatory standards. Under the regulatory capital standards, total capital has been defined as Tier I (core) capital and Tier II (supplementary) capital. The Corporation’s Tier I capital includes shareholders’ equity (net of unrealized security gains and losses) and subordinated debentures (subject to certain limits) while Tier II capital also includes the allowance for loan losses. The definition of risk-adjusted assets has also been modified to include items both on and off the balance sheet. Each item is then assigned a risk weight or risk adjustment factor to determine ratios of capital to risk adjusted assets. The standards require that total capital (Tier I plus Tier II) be a minimum of 8.0% of risk-adjusted assets, with at least 4.0% being in Tier I capital. To be well capitalized, a company must have a minimum of 10.0% of risk adjusted assets, with at least 6.0% being Tier I capital. The Corporation’s ratios as of December 31, 2008 and 2007 were 11.3% and 10.3% respectively for total risk-based capital, and 7.9% and 7.3% respectively for Tier I risk-based capital. The Corporation has elected to participate in the Treasury’s Capital Purchase Program. This participation will lead to improvement of the Corporation’s capital ratios. Upon completion, the Corporation’s total risk-based capital ratio will be 15.01% and the Tier I risk-based capital ratio will be 11.65%

Additionally, the Federal Reserve Board has adopted minimum leverage-capital ratios. These standards were established to supplement the previously issued risk based capital standards. The leverage ratio standards use the existing Tier I capital definition, but the ratio is applied to average total assets instead of risk-adjusted assets. The standards require that Tier I capital be a minimum of 4.0% of total average assets for high rated entities such as the Corporation and a minimum of 5.0% of total average assets to be well capitalized. The Corporation’s leverage ratio was 5.8% and 7.7% at December 31, 2008 and 2007. As with the risk-based capital ratios above, the leverage ratio will also improve as a result of the Corporation’s participation in the Treasury’s Capital Purchase Program. The leverage ratio will be 8.36%

Effects of Inflation

The Corporation’s balance sheet is typical of financial institutions and reflects a net positive monetary position whereby monetary assets exceed monetary liabilities. Monetary assets and liabilities are those which can be converted to a fixed number of dollars and include cash assets, securities, loans, money market instruments, deposits and borrowed funds.

During periods of inflation, a net positive monetary position may result in an overall decline in purchasing power of an entity. No clear evidence exists of a relationship between the purchasing power of an entity’s net positive monetary position and its future earnings. Moreover, the Corporation’s ability to preserve the purchasing power of its net positive monetary position will be partly influenced by the effectiveness of its asset/liability management program. Management does not believe that the effect of inflation on its nonmonetary assets (primarily bank premises and equipment) is material as such assets are not held for resale and significant disposals are not anticipated.

Fair Value of Financial Instruments

The Corporation has disclosed the estimated fair value of its financial instruments at December 31, 2008 and 2007 in Note 16 to the Consolidated Financial Statements. The fair value of loans at December 31, 2008 was 101.9% of the carrying value compared to 100.7% at December 31, 2007. The fair value of deposits at December 31, 2008 was 100.1% of the carrying value compared to 100.0% at December 31, 2007.

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Contractual Obligations

The following table represents significant fixed and determinable contractual obligations of the Corporation as of December 31, 2008.

	One year		One to		Three to		Over five
Contractual Obligations	or less		three years		five years		years		Total
Deposits without a stated maturity	$	470,434	$	—	$	—	$	—	$	470,434
Certificates of deposit		260,944		68,132		7,838		2,573		339,487
FHLB advances, securities sold under agreements to repurchase and U.S. Treasury interest- bearing demand note		44,751		30,068		22,569		7,723		105,111
Subordinated debentures (1)		—		—		—		29,427		29,427
Long-term debt		—		—		20,500		—		20,500
Operating leases		306		450		409		438		1,603

(1) The subordinated debentures consist of $2,000, $2,500, $5,000, $7,500, and $12,500 debentures. See Note 12 for additional information.

The Corporation has retail repurchase agreements with clients within its local market areas. These borrowings are collateralized with securities owned by the Corporation. See Note 10 to the Consolidated Financial Statements for further detail. The Corporation also has a cash management advance line of credit and outstanding letters of credit with the FHLB. For further discussion, refer to Note 9 to the Consolidated Financial Statements. The long-term debt consists of borrowing from a secured borrowing agreement with Key Bank, N.A. See Note 11 to the Consolidated Financial Statements for the terms of this borrowing.

Quantitative and Qualitative Disclosures About Market Risk

The Corporation’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Corporation’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Corporation’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Corporation’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Corporation seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Corporation to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, adopted a Joint Agency Policy Statement on interest-rate risk, effective June 26, 1996. The policy statement provides guidance to examiners and bankers on sound practices for managing interest-rate risk, which will form the basis for ongoing evaluation of the adequacy of interest-

21

rate risk management at supervised institutions. The policy statement also outlines fundamental elements of sound management that have been identified in prior Federal Reserve guidance and discusses the importance of these elements in the context of managing interest-rate risk. Specifically, the guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk. Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Corporation is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Corporation’s primary asset/liability management technique is the measurement of the Corporation’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.

Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refund its obligations at new, lower rates. The Corporation has not purchased derivative financial instruments in the past and does not intend to purchase such instruments in the near future. Prepayments of assets carrying higher rates reduce the Corporation’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short term or due on demand, while most of its assets may be invested in long term loans or securities. Accordingly, the Corporation seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. Also, FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Corporation.

The following table provides information about the Corporation’s financial instruments that are sensitive to changes in interest rates as of December 31, 2008 and 2007, based on certain prepayment and account decay assumptions that management believes are reasonable. The Corporation had no derivative financial instruments or trading portfolio as of December 31, 2008 or 2007. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Corporation’s borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.

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Net Portfolio Value

	December 31, 2008								December 31, 2007
Change in	Dollar		Dollar			Percent			Dollar		Dollar			Percent
Rates	Amount		Change			Change			Amount		Change			Change
+200bp	$	106,377	$	(24	)		0	%	$	118,940	$	(26,162	)		-18	%
+100bp		107,705		1,304			1	%		133,346		(11,756	)		-8	%
Base		106,401		—			—			145,102		—		—
-100bp		112,159		5,758			5	%		152,879		7,777			5	%

The change in net portfolio value from December 31, 2007 to December 31, 2008, is primarily a result of two factors. First, while the entire yield curve has moved down, the largest decreases were on the short end of the curve. Secondly, the Corporation’s balance sheet mix has shifted due to increases in the investment portfolio funded by increased usage of borrowed funds and large CDs. As a result, the Corporation has seen a decrease in the base level of net portfolio value, due to an increase in the fair value of its liabilities, particularly deposits, but also borrowed funds. An upward movement in rates would lead to nearly identical decreases in the fair value of assets and liabilities, and would lead to a very small decrease in the net portfolio value. A downward change would lead to an increase in the net portfolio value as the fair value of assets would increase faster than the fair value of the liabilities.

Critical Accounting Policies

Allowance for Loan Losses

The allowance for loan losses is regularly reviewed by management to determine whether or not the amount is considered adequate to absorb probable losses in the loan portfolio. If not, an additional provision is made to increase the allowance. This evaluation includes specific loss estimates on certain individually reviewed loans, the pooling of commercial credits risk graded as special mention and substandard that are not individually examined, and general loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay, and current economic and industry conditions, among other items.

Those judgments and assumptions that are most critical to the application of this accounting policy are assessing the initial and on-going credit-worthiness of the borrower, the amount and timing of future cash flows of the borrower that are available for repayment of the loan, the sufficiency of underlying collateral, the enforceability of third-party guarantees, the frequency and subjectivity of loan reviews and risk gradings, emerging or changing trends that might not be fully captured in the historical loss experience, and charges against the allowance for actual losses that are greater than previously estimated. These judgments and assumptions are dependent upon or can be influenced by a variety of factors including the breadth and depth of experience of lending officers, credit administration and the corporate loan review staff that periodically review the status of the loan, changing economic and industry conditions, changes in the financial condition of the borrower and changes in the value and availability of the underlying collateral and guarantees.

Management completes a similar process as above when the Corporation is in its due diligence phase of a pending merger. The allowance for loan losses at the target bank is evaluated for adequacy based on the same factors as used in the Corporations’ own allowance calculation. Upon completion of the merger, this process is repeated and any excess or deficiency in the allowance is recognized.

Note 1 and Note 5 in the Notes to Consolidated Financial Statements provide additional information regarding Allowance for Loan Losses.

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Goodwill

SFAS No. 142 requires an annual evaluation of goodwill for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The financial events of 2008 and the impact they have had on capital markets, including the Corporation’s stock prompted management to perform a more extensive evaluation of the Corporation’s goodwill during the fourth quarter of 2008.

Management, with the assistance of outside valuation experts, calculated the estimated fair value of the Bank to be $125 million based on three valuation approaches; (i) the comparable transactions approach; (ii) the control premium approach; and, (iii) the discounted cash flow approach. Once it is determined that the fair value is materially less than the carrying value, FAS 142 requires a company to calculate the implied fair value of goodwill and compare it to the carrying value of goodwill. The amount of the excess of the carrying amount of goodwill over the implied amount of goodwill is the amount of the impairment loss, which was calculated at $43,291. As a result, the Corporation recorded a goodwill impairment charge of $43,291 which reduced the goodwill balance on its books to $21,720 from $66,235. The goodwill impairment charge was computed by determining the fair value of the Bank on a controlling interest basis. The fair value was considered to be the amount at which the Bank could be sold in a current transaction between willing parties, that is, other than a forced liquidation sale.

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Management’s Report on Internal Control over Financial Reporting

We, as management of First Citizens Banc Corp, are responsible for establishing and maintaining effective internal control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the Corporation’s system of internal control over financial reporting as of December 31, 2008, in relation to criteria for effective internal control over financial reporting as described in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2008, its system of internal control over financial reporting is effective and meets the criteria of the “Internal Control — Integrated Framework”. Crowe Horwath LLP, independent registered public accounting firm, has issued an audit report on the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2008.

Management is responsible for compliance with the federal and state laws and regulations concerning dividend restrictions and federal laws and regulations concerning loans to insider designated by the FDIC as safety and soundness laws and regulations.

Management has assessed compliance by the Company with the designated laws and regulations relating to safety and soundness. Based on the assessment, management believes that the Company complied, in all significant respects, with the designated laws and regulations related to safety and soundness for the year ended December 31, 2008.

James O. Miller	Todd A. Michel
President, Chief Executive Officer	Senior Vice President, Controller
Sandusky, Ohio
March 4, 2009

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Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

We have audited First Citizens Banc Corp.’s internal control over financial reporting as of December 31, 2008, based on Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). First Citizens Banc Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, First Citizens Banc Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of First Citizens Banc Corp. as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2008 and our report dated March 4, 2009 expressed an unqualified opinion on those Consolidated Financial Statements.

	Crowe Horwath LLP
Cleveland, Ohio
March 4, 2009

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Report of Independent Registered Public Accounting Firm on Financial Statements

Board of Directors and Shareholders
First Citizens Banc Corp
Sandusky, Ohio

We have audited the accompanying consolidated balance sheets of First Citizens Banc Corp. as of December 31, 2008 and 2007, and the related statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Citizens Banc Corp. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the First Citizen Banc Corp.’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 4, 2009 expressed an unqualified opinion thereon.

	Crowe Horwath LLP
Cleveland, Ohio
March 4, 2009

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FIRST CITIZENS BANC CORP

CONSOLIDATED BALANCE SHEETS
December 31, 2008 and 2007
(In thousands, except share data)

	2008			2007
ASSETS
Cash and due from financial institutions	$	26,649		$	27,345
Federal funds sold		—			18,408
Securities available for sale		150,936			144,351
Loans, net of allowance of $8,862 and $7,374		787,789			787,386
Other securities		16,223			14,569
Premises and equipment, net		20,996			21,593
Premises and equipment, held for sale		—			719
Accrued interest receivable		5,764			7,142
Goodwill		21,720			66,235
Other intangible assets		7,780			9,689
Bank owned life insurance		11,365			10,876
Other assets		4,389			10,944
Total assets	$	1,053,611		$	1,119,257
LIABILITIES
Deposits
Noninterest-bearing	$	122,141		$	137,924
Interest-bearing		687,780			701,896
Total deposits		809,921			839,820
Federal Home Loan Bank advances		69,982			64,470
Securities sold under agreements to repurchase		31,143			27,395
U. S. Treasury interest-bearing demand note payable		3,986			2,259
Notes payable		20,500			21,500
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		12,035			8,230
Total liabilities		976,994			993,101
SHAREHOLDERS’ EQUITY
Common stock, no par value, 20,000,000 shares authorized, 8,455,881 shares issued		114,365			114,365
Retained earnings (accumulated deficit)		(16,546	)		29,446
Treasury stock, 747,964 shares at cost		(17,235	)		(17,235	)
Accumulated other comprehensive loss		(3,967	)		(420	)
Total shareholders’ equity		76,617			126,156
Total liabilities and shareholders’ equity	$	1,053,611		$	1,119,257

See accompanying notes to consolidated financial statements.

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FIRST CITIZENS BANC CORP

CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)

	2008			2007			2006
Interest and dividend income
Loans, including fees	$	54,116		$	43,999		$	40,637
Taxable securities		6,743			5,045			4,113
Tax-exempt securities		1,270			673			814
Federal funds sold and other		138			230			312
Total interest income		62,267			49,947			45,876
Interest expense
Deposits		15,376			14,058			11,091
Federal Home Loan Bank advances		3,131			3,188			1,421
Subordinated debentures		1,748			1,791			1,823
Other		1,525			1,334			1,280
Total interest expense		21,780			20,371			15,615
Net interest income		40,487			29,576			30,261
Provision for loan losses		8,207			1,020			1,128
Net interest income after provision for loan losses		32,280			28,556			29,133
Noninterest income
Computer center item processing fees		714			845			896
Service charges		4,779			3,558			3,223
Net gains (loss) on sale of securities		193			(1	)		—
Net gain on sale of loans		8			11			20
ATM fees		1,368			851			724
Trust fees		1,904			1,185			1,280
Gain/Loss on sale of Fixed Assets		(137	)		(64	)		148
Bank owned life insurance		489			530			346
Loss on sale of other real estate owned		(313	)		(243	)		(663	)
Other		651			833			696
Total noninterest income		9,656			7,505			6,670
Noninterest expense
Salaries and wages		14,388			10,908			11,246
Benefits		2,785			2,707			3,100
Net occupancy expense		2,346			1,432			1,440
Equipment expense		2,285			1,228			1,214
Contracted data processing		1,208			862			897
State franchise tax		1,132			873			734
Professional services		1,850			1,144			1,532
Amortization of intangible assets		1,467			732			673
ATM expense		718			530			461
Telephone		932			424			469
Courier		680			667			654
Goodwill impairment		43,291			—			—
Other operating expenses		6,463			4,656			4,557
Total noninterest expense		79,545			26,163			26,977
Income (loss) before income taxes		(37,609	)		9,898			8,826
Income tax expense		1,369			3,013			2,666
Net income (loss)	$	(38,978	)	$	6,885		$	6,160
Earnings (loss) per common share, basic and diluted	$	(5.06	)	$	1.25		$	1.12
Weighted average basic common shares		7,707,917			5,505,023			5,520,692

See accompanying notes to consolidated financial statements.

29

FIRST CITIZENS BANC CORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Years ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)

												Accumulated
												Other			Total
	Common Stock					Retained			Treasury			Comprehensive			Shareholders’
	Shares			Amount		Earnings			Stock			Income (Loss)			Equity
Balance, December 31, 2005		5,801,402		$	68,430	$	27,939		$	(7,623	)	$	(1,636	)	$	87,110
SAB 108 adjustments, net of tax							755									755
Comprehensive Income:
Net Income							6,160									6,160
Change in minimum additional pension liability, net of tax													263			263
Change in unrealized gain/(loss) on securities available for sale, net of reclassification and tax effects													724			724
Total comprehensive income																7,147
Cumulative effect of change in accounting for pension obligations													(1,729	)		(1,729	)
Cash dividends ($1.12 per share)							(6,220	)								(6,220	)
Purchase of treasury stock, at cost		(330,102	)							(7,591	)					(7,591	)
Balance, December 31, 2006		5,471,300		$	68,430	$	28,634		$	(15,214	)	$	(2,378	)	$	79,472

See accompanying notes to consolidated financial statements.

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FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
Years ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)

												Accumulated
												Other			Total
	Common Stock					Retained			Treasury			Comprehensive			Shareholders’
	Shares			Amount		Earnings			Stock			Income (Loss)			Equity
Balance, December 31, 2006		5,471,300		$	68,430	$	28,634		$	(15,214	)	$	(2,378	)	$	79,472
Comprehensive Income:
Net Income							6,885									6,885
Change in funded status on pension benefits, net of tax													1,082			1,082
Change in unrealized gain/(loss) on securities available for sale, net of reclassification and tax effects													876			876
Total comprehensive income																8,843
Cash dividends ($1.12 per share)							(6,073	)								(6,073	)
Issuance of 2,343,617 shares for acquisition		2,343,617			45,935											45,935
Purchase of treasury stock, at cost		(107,000	)							(2,021	)					(2,021	)
Balance, December 31, 2007		7,707,917		$	114,365	$	29,446		$	(17,235	)	$	(420	)	$	126,156

See accompanying notes to consolidated financial statements.

31

FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
Years ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)

					Retained						Accumulated
					Earnings						Other			Total
	Common Stock				(Accumulated			Treasury			Comprehensive			Shareholders’
	Shares		Amount		deficit)			Stock			Income (Loss)			Equity
Balance, December 31, 2007		7,707,917	$	114,365	$	29,446		$	(17,235	)	$	(420	)	$	126,156
Comprehensive Income:
Net Income (loss)						(38,978	)								(38,978	)
Change in funded status on pension benefits, net of tax												(4,492	)		(4,492	)
Change in unrealized gain/(loss) on securities available for sale, net of reclassification and tax effects												945			945
Total comprehensive income (loss)															(42,525	)
Cash dividends ($0.91 per share)						(7,014	)								(7,014	)
Balance, December 31, 2008		7,707,917	$	114,365	$	(16,546	)	$	(17,235	)	$	(3,967	)	$	76,617

See accompanying notes to consolidated financial statements.

32

FIRST CITIZENS BANC CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)

	2008			2007			2006
Cash flows from operating activities
Net income (loss)	$	(38,978	)	$	6,885		$	6,160
Adjustments to reconcile net income to net cash from operating activities
Security amortization, net of accretion		(255	)		(416	)		(10	)
Depreciation		1,986			999			930
Gain (loss) on sale of fixed assets		137			64			(148	)
Amortization of intangible assets		1,467			732			673
Amortization of and valuation allowance on servicing rights		(43	)		(55	)		(53	)
Net realized (gain) loss on sale of securities		(193	)		1			—
FHLB stock dividends		(468	)		(127	)		(464	)
Provision for loan losses		8,207			1,020			1,128
Loans originated for sale		—			—			(188	)
Proceeds from sale of loans		—			—			208
Gain on sale of loans		(8	)		(11	)		(20	)
Loss on sale of OREO properties		313			243			663
Bank owned life insurance		(489	)		(530	)		(346	)
Goodwill Impairment		43,291			—			—
Deferred income taxes		(709	)		1,753			276
Change in
Net deferred loan fees		71			(694	)		(489	)
Accrued interest receivable		1,378			(96	)		(750	)
Other assets		3,805			(6,086	)		624
Accrued interest, taxes and other expenses		300			(28	)		920
Net cash from operating activities		19,812			3,654			9,114
Cash flows from investing activities
Cash paid in bank acquisition, net of cash received		—			(6,347	)		—
Securities available for sale
Maturities, prepayments and calls		63,159			55,873			62,487
Purchases		(68,085	)		(55,621	)		(43,629	)
Securities held for maturity
Maturities, prepayments and calls		—			4			4
Purchases of FRB stock		(1,186	)		(10	)		(16	)
Purchases of Bank owned life insurance		—			—			(10,000	)
Loan originations, net of loan payments		(9,719	)		(39,153	)		(35,212	)
Proceeds from sale of OREO properties		733			1,632			604
Property and equipment expenditures		(807	)		(1,134	)		(250	)
Change in federal funds sold		18,408			2,134			25,510
Net cash from investing activities		2,503			(42,622	)		(502	)

See accompanying notes to consolidated financial statements.

33

FIRST CITIZENS BANC CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)

	2008			2007			2006
Cash flows from financing activities
Change in deposits		(29,899	)		(20,761	)		(12,554	)
Cash received in deposit acquisition		3,915			47,767			—
Repayment of Federal Home Loan Bank advances		(188	)		(150	)		(133	)
Net change in short-term FHLB advances		700			(38,509	)		38,510
Net change in long-term FHLB advances		5,000			50,000			(30,000	)
Change in securities sold under repurchase agreements		3,748			3,992			6,931
Change in U.S. Treasury interest-bearing notes payable		1,727			(1,292	)		1,044
Change in short-term note payable		(1,000	)		15,500			(1,000	)
Cash dividends paid		(7,014	)		(6,073	)		(6,220	)
Net proceeds from issuance of subordinated debenture		—			5,000			—
Redemption of subordinated debenture		—			(5,000	)		—
Purchase of treasury stock		—			(2,021	)		(7,591	)
Net cash from financing activities		(23,011	)		48,453			(11,013	)
Net change in cash and due from financial institutions		(696	)		9,485			(2,401	)
Cash and due from financial institutions at beginning of year		27,345			17,860			20,261
Cash and due from financial institutions at end of year	$	26,649		$	27,345		$	17,860
Supplemental cash flow information:
Interest paid		22,138			20,500			15,490
Income taxes paid		345			2,110			1,800
Supplemental non-cash disclosures:
Transfer of loans from portfolio to other real estate owned	$	1,920		$	1,857		$	565
Fixed assets transferred to/(from) held for sale		(719	)		—			840
Fair value of assets acquired in Futura acquisition				$	322,505
Common stock and cash issued for acquisition					(62,758	)
Total liabilities assumed					259,747

See accompanying notes to consolidated financial statements.

34

FIRST CITIZENS BANC CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the accounting policies adopted by First Citizens Banc Corp, which have a significant effect on the financial statements.

Nature of Operations and Principles of Consolidation: The Consolidated Financial Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries: The Citizens Banking Company (Citizens), SCC Resources, Inc. (SCC), First Citizens Insurance Agency, Inc., and Water Street Properties, Inc. (Water St.). First Citizens Capital LLC (FCC) is wholly-owned by Citizens to hold inter-company debt that is eliminated in consolidation. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens to hold and manage its securities portfolio and is eliminated in consolidation. The operations of FCC are located in Wilmington, Delaware. The above companies together are referred to as the Corporation. Intercompany balances and transactions are eliminated in consolidation. Champaign Investment Company (CIC) was a subsidiary that provided financial planning and investment advisory services to the former Futura Banc Corporation’s customers. On December 19, 2008, CIC was merged with Citizens

The Corporation provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Summit, Huron, Ottawa, and Richland. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customer’s ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and Federal Funds sold. In 2008, SCC provided item processing for four financial institutions in addition to Citizens. SCC accounted for 2.3% of the Corporation’s total revenues. First Citizens Insurance Agency Inc. was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue is less than 1.0% of total revenue for the year ended December 31, 2008. Water Street Properties, Inc. was formed to hold repossessed assets of FCBC’s subsidiaries. Water St. revenue was than 1% of total revenue for the year ended December 31, 2008.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, impairment of goodwill, fair values of financial instruments and pension obligations are particularly subject to change.

Cash Flows: Cash and cash equivalents include cash on hand and demand deposits with financial institutions with maturities fewer than 90 days. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, and federal funds purchased or sold and repurchase agreements.

Interest-Bearing Deposits in Other Financial Institutions: Interest-bearing deposits in other financial institutions mature within one year and are carried at cost.

(Continued)

35

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Securities: Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are also classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are based on the amortized cost of the security sold using the specific identification method.

Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, and (3) the Corporation’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.

Other securities which include Federal Home Loan Bank (FHLB) stock, Federal Reserve Bank (FRB) stock, Farmer Mac stock (FMS), Bankers’ Bancshares Inc. (BB) stock, and Norwalk Community Development Corp (NCDC) stock are carried at cost.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market and loans that management no longer intends to hold for the foreseeable future, are carried at the lower of aggregate cost or market, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principle balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Interest income on consumer loans is discontinued when management determines future collection is unlikely. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued, but not received, for loans placed on nonaccrual, is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Purchased Loans: The Corporation purchases individual loans and groups of loans. Purchased loans that show evidence of credit deterioration since origination are recorded at the amount paid (or allocated fair value in a purchase business combination), such that there is no carryover of the seller’s allowance for

(Continued)

36

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

loan losses. After acquisition, incurred losses are recognized by an increase in the allowance for loan losses.

Purchased loans are accounted for individually or aggregated into pools of loans based on common risk characteristics (e.g., credit score, loan type, and date of origination). The Corporation estimates the amount and timing of expected cash flows for each purchased loan or pool, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected future cash flows is greater than the carrying amount, it is recognized as part of future interest income.

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, risk, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.

A loan is impaired when full payment under the loan terms is not expected. Commercial and commercial real estate loans over $350,000 are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the estimated fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans of such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.

Other Real Estate: Other real estate acquired through or instead of loan foreclosure is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. Other real estate owned included in other assets totaled approximately $1,661 at December 31, 2008 and $557 at December 31, 2007.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using both accelerated and straight-line methods over the estimated useful life of the asset, ranging from three to seven years for furniture and equipment and seven to fifty years for buildings and improvements.

(Continued)

37

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Federal Home Loan Bank (FHLB) stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and evaluated periodically for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Federal Reserve Bank (FRB) stock: The Bank is a member of the Federal Reserve System. FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.

Bank Owned Life Insurance (BOLI): Citizens has purchased life insurance policies on certain key executives. Upon adoption of EITF 06-5, which is discussed further below, BOLI is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Prior to the adoption of EITF 06-5, the Corporation recorded BOLI at its cash surrender value.

In September 2006, the FASB Emerging Issues Task Force finalized Issue No. 06-5, Accounting for Purchases of Life Insurance-Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4 (Accounting for Purchases of Life Insurance). This Issue requires that a policyholder consider contractual terms of a life insurance policy in determining the amount that could be realized under the insurance contract. It also requires that if the contract provides for a greater surrender value if all individual policies in a group are surrendered at the same time, that the surrender value be determined based on the assumption that policies will be surrendered on an individual basis. Lastly, the Issue requires disclosure when there are contractual restrictions on the Company’s ability to surrender a policy. The adoption of EITF 06-5 on January 1, 2007 had no impact on the Corporation’s financial condition or results of operations.

Goodwill and Other Intangible Assets: Goodwill results from prior business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment will be recognized in the period identified.

Other intangible assets consist of core deposit and other intangible assets arising from whole bank and branch acquisitions. These intangible assets are measured at fair value and then amortized on an accelerated method over their estimated useful lives, which range from five to twelve years.

Servicing Rights: Servicing rights are recognized as assets for the allocated value of retained servicing rights on loans sold. Guidelines as set for in paragraphs 68, 69 and 70 of FASB 140 are followed to estimate the “fair value of the servicing asset” and as further clarified by the fair value techniques of FASB 157. The valuation technique used is the present value of estimated future cash flows using current market discount rates. Servicing rights are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights, using groupings of the underlying loans as to interest rates and then, secondarily, prepayment characteristics. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment of a grouping is reported as a valuation allowance to the extent that fair value is less than the capitalized asset for the grouping.

(Continued)

38

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-term Assets: Premises and equipment, core deposit and other intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Repurchase Agreements: Substantially all repurchase agreement liabilities represent amounts advanced by various customers. Securities are pledged to cover these liabilities, which are not covered by federal deposit insurance.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.

Stock-Based Compensation: Effective January 1, 2006, the Corporation adopted SFAS No. 123(R), Share-based Payment, using the modified prospective transition method. The adoption of this standard had no effect on net income in 2006, as all options outstanding at December 31, 2005 were fully vested and no additional options have been granted.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

The Corporation adopted FASB Interpretation 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), as of January 1, 2007. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no material effect on the Corporation’s financial statements.

The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans: Pension expense is the net of service and interest cost, return on plan assets and amortization of gains and losses not immediately recognized. Employee 401(k) and profit sharing plan expense is the amount of matching contributions. Deferred compensation allocates the benefits over the years of service.

Earnings per Common Share: Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale and changes in the funded status of the pension plan, which are also recognized as separate components of shareholders’ equity.

(Continued)

39

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements. These balances do not earn interest.

Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by Citizens to FCBC or by FCBC to shareholders.

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Operating Segments: While the Corporation’s chief decision makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the Corporation’s financial service operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

Adoption of New Accounting Standards:

In February 2006, the FASB issued Statement No. 155, Accounting for Certain Hybrid Financial Instruments (SFAS No. 155), which permits fair value re-measurement for hybrid financial instruments, clarifies which instruments are subject to the requirements of Statement No. 133, and establishes a requirement to evaluate interests in securitized financial assets and other items. The new standard is effective for financial assets acquired or issued after the beginning of the entity’s first fiscal year that begins after September 15, 2006. The adoption of this statement did not have a material impact on the Corporation’s consolidated financial position or results of operations.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement establishes a fair value hierarchy about the assumptions used to measure fair value and clarifies assumptions about risk and the effect of a restriction on the sale or use of an asset. The standard was effective beginning after January 1, 2008. See Note 16 for additional detail.

(Continued)

40

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. The standard provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The new standard became effective for the Corporation on January 1, 2008. The Corporation did not elect to apply the standard to any financial assets or liabilities.

In September 2006, the FASB Emerging Issues Task Force finalized Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. This issue requires that a liability be recorded during the service period when a split-dollar life insurance agreement continues after participants’ employment or retirement. The required accrued liability will be based on either the post-employment benefit cost for the continuing life insurance or based on the future death benefit depending on the contractual terms of the underlying agreement. This issue is effective for fiscal years beginning after December 15, 2007. The impact of adoption of EITF 06-4 was immaterial.

Effect of Newly Issued but Not Yet Effective Accounting Standards:

In December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations (“FAS 141(R)”), which establishes principals and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. FAS No. 141(R) is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard is not expected to have a material effect on the Corporation’s results of operations or financial position.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact of SFAS No. 161 on the Corporation’s disclosures.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162 “The Heirarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. This Statement will be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411. The adoption of SFAS No. 162 is not expected to impact the Corporation’s consolidated financial statements.

On February 20, 2008, the FASB issued Staff Position FAS 140-3 “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions” (FSP FAS 140-3”) to resolve questions about the accounting for repurchase financings. This FSP is effective for repurchase financings in which the initial transfer is entered into in fiscal years beginning after November 15, 2008. Management is currently evaluating the impact, if any, of FSP FAS 140-3 on the Corporation’s consolidated financial statements.

(Continued)

41

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

On April 25, 2008, the FASB issued Staff Position FAS 142-3 “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3), which amends the list of factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142 “Goodwill and Other Intangible Assets.” FSP FAS 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Management is currently evaluating the impact, if any, of FSP FAS 142-3 on the Corporation’s consolidated financial statements.

On May 9, 2008, the FASB issued Staff Position APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP APB 14-1 is not expected to impact the Corporation’s consolidated financial statements.

On June 16, 2008, the FASB issued Staff Position EITF 03-6-1 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (FSP EITF 03-6-1”). The FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP EITF 03-6-1 is not expected to impact the Corporation’s consolidated financial statements.

NOTE 2 — MERGERS

On December 17, 2007, the Corporation completed the merger of Futura Banc Corporation (“Futura”) which was announced June 7, 2007. Immediately following the merger, Futura’s banking subsidiary, Champaign National Bank, was merged into FCBC’s banking affiliate, Citizens Banking Company.

The Corporation issued 2,343,617 shares of common stock valued at approximately $45,935 and paid cash of $16,823 resulting in an aggregate purchase price of $62,758, before considering direct expenses related to the acquisition. Total assets of Futura prior to the merger were $281,810, including $207,982 in loans and $237,681 in deposits. The transaction was recorded as a purchase and, accordingly, the operating results of Futura have been included in the Corporation’s Consolidated Financial Statements since the date of the merger. The aggregate of the purchase price over the fair value of the net assets acquired of approximately $39,667 will be evaluated for impairment on an annual basis.

(Continued)

42

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 2 – MERGERS (Continued)

The following summarizes pro forma financial information for the year ended December 31, 2007, and 2006, assuming the Futura merger occurred at the start of each period stated.

	2007		2006
Net interest income after provision for loan losses	$	37,555	$	39,894
Net income		6,848		8,151
Basic and diluted earnings per share		0.87		1.04

The pro forma information includes adjustments for interest income on loans and securities acquired, amortization of identifiable intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired and related tax effects. The pro forma results do not necessarily represent results which would have occurred if the merger had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for Futura. Core deposit intangibles and other intangibles will be amortized over periods of between five and ten years using an accelerated method. Goodwill will not be amortized, but instead will be evaluated for impairment.

Cash and short-term investments	$	26,517
Securities		35,032
Loans, net		201,669
Goodwill		39,667
Core deposit intangible		5,321
Customer relationship intangible		864
Other assets		13,435
Total assets acquired		322,505
Deposits		238,562
Other borrowed funds		18,904
Other liabilities		2,281
Total liabilities assumed		259,747
Net assets acquired	$	62,758

This acquisition provided the Corporation with the strategic opportunity to expand into new markets that while similar to existing markets are projected to be more vibrant in population growth and wage growth. Additionally, the acquisition will provide exposure to suburbs of larger urban areas without the commitment of operating inside large metropolitan areas dominated by regional and national financial organizations. The acquisition also creates synergies on the operational side of the Corporation by allowing non-interest expenses to be spread over a larger operating base.

On October 5, 2007, the Company acquired a branch office facility and assumed related deposits from Miami Valley Bank. Approximately $56,448 of deposits was assumed, along with $9,092 in liquid assets, were received. Additionally, the Corporation had an option to buy the premises and equipment, at fair

(Continued)

43

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 2 – MERGERS (Continued)

market value. The Corporation did elect to purchase the office located in Quincy, Ohio while declining the option to purchase the office located in Lakeview, Ohio. The Corporation instead opted to serve these customers from the Russells Point office, which is located approximately one mile from Lakeview. The transaction resulted in both amortizable intangibles of $945 and non-amortizable goodwill of $476. The core deposit intangible will be amortized to expense over 10 years using an accelerated method. The Company acquired the branch at a premium to further solidify its market share in its southern market, expand its customer base to enhance deposit fee income, provide an opportunity to market additional products and services to new customers, and improve customer convenience by adding a new location. Regarding the two matters discussed above, the goodwill of $476 will be deductible over 15 years for tax purposes. The remaining goodwill is not deductible.

NOTE 3 — SECURITIES

The fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows.

			Gross		Gross
	Fair		Unrealized		Unrealized
	Value		Gains		Losses
2008
U.S. Treasury securities and obligations of U.S. government agencies	$	76,511	$	1,391	$	(65	)
Obligations of states and political subdivisions		34,673		527		(219	)
Mortgage-back securities		39,076		583		(36	)
Total debt securities		150,260		2,501		(320	)
Equity securities		676		195		—
Total	$	150,936	$	2,696	$	(320	)

			Gross		Gross
	Fair		Unrealized		Unrealized
	Value		Gains		Losses
2007
U.S. Treasury securities and obligations of U.S. government agencies	$	95,723	$	834	$	(13	)
Obligations of states and political subdivisions		28,441		139		(30	)
Mortgage-back securities		19,706		73		(59	)
Total debt securities		143,870		1,046		(102	)
Equity securities		481		—		—
Total	$	144,351	$	1,046	$	(102	)

(Continued)

44

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 3 – SECURITIES (Continued)

The fair value of securities and carrying amount, if different, at year end 2008 by contractual maturity were as follows. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	Available for sale
	Fair Value
Due in one year or less	$	8,141
Due from one to five years		38,151
Due from five to ten years		34,170
Due after ten years		30,722
Mortgage-backed		39,076
Equity securities		676
Total	$	150,936

Securities with a carrying value of $125,385 and $121,198 were pledged as of December 31, 2008 and 2007, to secure public deposits and other deposits and liabilities as required or permitted by law.

Proceeds from sales of securities, gross realized gains and gross realized losses were as follows.

	2008		2007			2006
Sale proceeds	$	—	$	—		$	—
Gross realized gains		—		—			—
Gross realized losses		—		—			—
Gains (losses) from securities called or settled by the issuer		193		(1	)		—

(Continued)

45

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 3 – SECURITIES (Continued)

Debt securities with unrealized losses at year end 2008 and 2007 not recognized in income are as follows.

2008	12 Months or less				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	6,991	$	65	$	—	$	—	$	6,991	$	65
Obligations of states and political subdivisions		10,370		140		1,355		79		11,725		219
Mortgage-backed securities		3,070		36		—		—		3,070		36
Total temporarily impaired	$	20,431	$	241	$	1,355	$	79	$	21,786	$	320

2007	12 Months or less				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	—	$	—	$	3,010	$	13	$	3,010	$	13
Obligations of states and political subdivisions		3,712		11		6,026		19		9,738		30
Mortgage-backed securities		—		—		2,285		59		2,285		59
Total temporarily impaired	$	3,712	$	11	$	11,321	$	91	$	15,033	$	102

The Corporation evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Corporation may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

Unrealized losses on securities have not been recognized into income because the issuers’ bonds are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to changes in market interest rates. The fair value is expected to recover as the securities approach their maturity date or reset date.

(Continued)

46

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 4 — LOANS

Loans at year-end were as follows.

	2008			2007
Commercial and agricultural	$	109,375		$	96,385
Commercial real estate		313,000			299,005
Residential real estate		325,962			343,160
Real estate construction		30,628			33,480
Consumer		17,409			20,359
Credit card and other		400			2,467
Leases		164			185
Total Loans		796,938			795,041
Allowance for loan losses		(8,862	)		(7,374	)
Net deferred loan fees		(287	)		(281	)
Net loans	$	787,789		$	787,386

Loans to directors and executive officers, including their immediate families and companies in which they are principal owners during 2008 were as follows.

Balance — January 1, 2008	$	4,515
New loans and advances		2,468
Repayments		(1,223	)
Effect of changes to related parties		(483	)
Balance — December 31, 2008	$	5,277

Deposits from principal officers, directors, and their affiliates at year-end 2008 and 2007 were $3,898 and $6,490.

NOTE 5 — ALLOWANCE FOR LOAN LOSSES

A summary of the activity in the allowance for loan losses was as follows.

	2008			2007			2006
Balance — January 1	$	7,374		$	8,060		$	9,212
Provision for loan losses		8,207			1,020			1,128
Balance from acquisition		—			1,277			—
Loans charged-off		(7,798	)		(4,028	)		(3,466	)
Recoveries		1,079			1,045			1,186
Balance — December 31	$	8,862		$	7,374		$	8,060

(Continued)

47

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 5 — ALLOWANCE FOR LOAN LOSSES (Continued)

Impaired loans were as follows.

	2008		2007
Year-end loans with no allocated allowance for loan losses	$	8,001	$	6,193
Year-end loans with allocated allowance for loan losses		6,636		6,772
Amount of allowance for loan losses allocated		1,897		2,057

	2008		2007		2006
Average balance of impaired loans during year	$	14,438	$	15,807	$	12,404
Interest income recognized during impairment		626		1,008		533
Interest income recognized on a cash basis		626		1,008		533

Nonperforming loans were as follows:

	2008		2007
Loans past due over 90 days still on accrual	$	3,053	$	2,423
Nonaccrual loans		17,943		9,308

Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

Purchased Loans subject to SOP 03-3:

In conjunction with the Futura merger (see Note 2), Citizens acquired certain loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows:

	2008		2007
Commercial	$	2,015	$	4,275
Outstanding balance	$	2,015	$	4,275

These loans were recorded at their net realizable value on December 17, 2007. There are no specific allowances recorded for these loans at December 31, 2008.

Any accretable yield, or income expected to be collected subsequent to the acquisition date, is not material.

For those purchased loans disclosed above, the Corporation did not increase the allowance for loan losses during 2008 and no allowances for loan losses were reversed during 2008.

(Continued)

48

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 5 — ALLOWANCE FOR LOAN LOSSES (Continued)

Purchased loans for which it was probable at acquisition that all contractually required payments would not be collected are as follows:

	2007
Contractually required payments recievable of loans purchased during the year:
Commercial	$	12,937

	2007
Cash flows expected to be collected at acquisition		4,396
Fair value of acquired loans at acquisition		4,275

NOTE 6 — PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows.

	2008			2007
Land and improvements	$	3,981		$	3,965
Buildings and improvements		19,860			18,877
Furniture and equipment		17,020			16,440
Total		40,861			39,282
Accumulated depreciation		(19,865	)		(17,689	)
Premises and equipment, net	$	20,996		$	21,593

Depreciation expense was $1,986, $999 and $930 for 2008, 2007 and 2006.

Rent expense was $381, $201 and $191 for 2008, 2007, and 2006. Rent commitments under non-cancelable operating leases were as follows, before considering renewal options that generally are present.

2009	$	306
2010		246
2011		204
2012		204
2013		204
2014		175
2015		88
Total	$	1,427

The rent commitments listed above are primarily for the leasing of eight financial services branches.

(Continued)

49

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the years ended December 31, 2008 and December 31, 2007 is as follows.

	2008			2007
Beginning of year	$	66,235		$	26,093
Acquired goodwill		—			40,142
Impairment		(43,291	)		—
Other adjustments		(1,224	)		—
End of year	$	21,720		$	66,235

SFAS No. 142 requires an annual evaluation of goodwill for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The financial events of 2008 and the impact they have had on capital markets, including the Corporation’s stock prompted management to perform a more extensive evaluation of the Corporation’s goodwill during the fourth quarter of 2008.

As a result, the Corporation recorded a goodwill impairment charge of $43,291 which reduced the goodwill balance on its books to $21,720 from $66,235. The goodwill impairment charge was computed by determining the fair value of the Bank on a controlling interest basis. The fair value was considered to be the amount at which the Bank could be sold in a current transaction between willing parties, that is, other than a forced liquidation sale. Three different methods were used to determine the fair value of the Bank. The three methods used were the discounted cash flow method, the comparable transactions method and the control premium method.

Acquired Intangible Assets

Acquired intangible assets were as follows as of year end.

	2008				2007
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Core deposit and other intangibles	$	13,113	$	5,333	$	13,554	$	3,865

Aggregate amortization expense was $1,467, $732 and $673 for 2008, 2007 and 2006.

Estimated amortization expense for each of the next five years and thereafter is as follows.

2009	$	1,288
2010		1,218
2011		1,162
2012		974
2013		847
Thereafter		2,291
	$	7,780

(Continued)

50

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 8 — INTEREST-BEARING DEPOSITS

Interest-bearing deposits as of December 31, 2008 and 2007 were as follows.

	2008		2007
Demand	$	224,966	$	221,015
Statement and Passbook Savings		123,327		146,478
Certificates of Deposit
In excess of $100		119,893		85,540
Other		177,297		204,883
Individual Retirement Accounts		42,297		43,980
Total	$	687,780	$	701,896

Scheduled maturities of certificates of deposit, including IRA’s at December 31, 2008 were as follows.

2009	$	260,944
2010		60,347
2011		7,785
2012		5,292
2013		2,546
Thereafter		2,573
Total	$	339,487

NOTE 9 — FEDERAL HOME LOAN BANK ADVANCES

The Corporation has a $40 million cash management advance line of credit with the Federal Home Loan Bank. The Corporation had $7 million outstanding on this line as of December 31, 2008 and had no advances outstanding on this line as of December 31, 2007. The Corporation also has an $80 million repo advance line with the Federal Home Loan Bank. The Corporation had $0 in advances outstanding on this line as of December 31, 2008 and December 31, 2007.

The Corporation has fixed-rate mortgage-matched advances from the Federal Home Loan Bank. Mortgage-matched advances are utilized to fund specific fixed-rate loans with certain prepayment of principal permitted without penalty.

At year end, advances from the Federal Home Loan Bank were as follows:

	2008		2007
Maturities May 2009 through January 2017, fixed rate at rates from 2.84% to 7.80%, averaging 4.40%	$	69,982	$	64,470

(Continued)

51

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 9 — FEDERAL HOME LOAN BANK ADVANCES (Continued)

Scheduled principal reduction of FHLB advances at December 31, 2008 were as follows.

2009	$	9,622
2010		30,036
2011		32
2012		22,534
2013		35
Thereafter		7,723
Total	$	69,982

In addition to the borrowings, the Corporation has outstanding letters of credit with the Federal Home Loan Bank totaling $28,750 at year-end 2008 and $27,750 at year-end 2007 used for pledging to secure public funds. Federal Home Loan Bank borrowings and the letters of credit are collateralized by Federal Home Loan Bank stock and by $148,099 and $124,496 of residential mortgage loans under a blanket lien arrangement at year-end 2008 and 2007.

NOTE 10 — OTHER BORROWINGS

Information concerning securities sold under agreements to repurchase and treasury tax and loan deposits were as follows.

	2008			2007
Average balance during the year	$	33,413		$	24,478
Average interest rate during the year		1.70	%		4.10	%
Maximum month-end balance during the year	$	40,153		$	32,057
Weighted average interest rate at year end		1.66	%		3.70	%

Securities underlying repurchase agreements had a fair value of $38,294 at December 31, 2008 and $30,878 at December 31, 2007.

NOTE 11 – NOTE PAYABLE

FCBC has a secured borrowing agreement with Key Bank, NA for up to $25,000. The agreement is split into two pieces; a $15,000 secured revolving line of credit which matures November 29, 2012, and a $10,000 term loan. The term loan matures November 29, 2012 and will require a $5,000 balloon principal payment. The borrowing agreement also contains covenants related to capital ratios, nonperforming assets and return on average assets. Compliance with covenants is monitored and reported to Key Bank, NA quarterly. At December 31, 2008, $11,500 was outstanding on the line of credit balance and the term loan balance was $9,000. At December 31, 2007, $11,500 was outstanding on the line of credit and the term loan was $10,000. The interest rate is three month LIBOR plus 1.15%, or 3.15% at December 31, 2008 and 6.12% at December 31, 2007, and adjusts quarterly. The borrowings are secured by 100% of the common stock of Citizens. Subsequent to December 31, 2008, the Corporation repaid these borrowings in full.

(Continued)

52

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 12 – SUBORDINATED DEBENTURES

Trusts formed by the Corporation, in March 2003 and March 2002, issued $7,500 of floating rate and $5,000 of floating rate trust preferred securities through special purpose entities as part of pooled offerings of such securities. The Corporation issued subordinated debentures to the trusts in exchange for the proceeds of the offerings, which debentures represent the sole assets of the trusts. The Corporation may redeem the subordinated debentures, in whole but not in part, any time prior to March 26, 2008 and March 26, 2007, respectively at a price of 107.50% of face value. After March 26, 2008 and March 26, 2007, respectively, subordinated debentures may be redeemed at face value. The Corporation elected to redeem and refinance the $5,000 floating rate subordinated debenture that was issued in March of 2002. The refinancing was done at face value and resulted in a 2.00% reduction in the rate. The new subordinated debenture has a 30 year maturity and has a “No Call Period” of five years. The new subordinated debenture is redeemable, in whole or in part, anytime without penalty after the expiration of the “No Call Period”. At the time of the refinancing, the corporation amortized the remaining $126 of deferred issuance costs associated with the original subordinated debenture. The replacement subordinated debenture does not have any deferred issuance cost associated with it. The interest rate at December 31, 2008 on the $7,500 debenture is 6.63% and the $5,000 debenture is 4.42%.

Additionally, a trust formed in September 2004 by the Corporation issued $12,500 of 6.05% fixed rate trust preferred securities for five years, then becoming floating rate trust preferred securities, through a special purpose entity as part of a pooled offering of such securities. The Corporation issued subordinated debentures to the trusts in exchange for the proceeds of the offerings, which debentures represent the sole assets of the trusts. The Corporation may redeem the subordinated debentures, in whole but not in part, any time prior to September 20, 2009 at a price of 107.50% of face value. After September 20, 2009 subordinated debentures may be redeemed at face value. The current rate on the $12,500 subordinated debenture is 6.05%.

Finally, the Corporation acquired two additional trust preferred securities as part of the Futura acquisition. Futura TPF Trust I and Futura TPF Trust II were formed in June of 2005 in the amounts of $2,500 and $2,000, respectively. The Corporation issued subordinated debentures to the trusts in exchange for ownership of all of the common security of the trusts and the proceeds of the preferred securities sold by the trusts. The Corporation may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1,000, on or after June 15, 2010 at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on June 15, 2035. The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the trust indenture. The current rate on the $2,500 subordinated debenture is variable at 3.66% and the current rate on the $2,000 subordinated debenture is fixed until June 2010 at 5.71%.

(Continued)

53

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 13 — INCOME TAXES

Income tax expense was as follows.

	2008			2007		2006
Current	$	2,078		$	1,260	$	2,390
Deferred		(709	)		1,753		276
Income tax expense	$	1,369		$	3,013	$	2,666

Effective tax rates differ from the statutory federal income tax rate of 34% due to the following.

	2008			2007			2006
Income taxes computed at the statutory federal tax rate	$	(12,787	)	$	3,365		$	3,001
Add (subtract) tax effect of
Goodwill impairment		14,611			—			—
Nontaxable interest income, net of nondeductible interest expense		(504	)		(195	)		(253	)
Dividends received deduction		(1	)		(22	)		(1	)
Cash surrender value of BOLI		(166	)		(180	)		(118	)
Other		216			45			37
Income tax expense	$	1,369		$	3,013		$	2,666

Tax expense attributable to security gains totaled $66, $0 and $0 in 2008, 2007 and 2006.

(Continued)

54

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 13 — INCOME TAXES (Continued)

Year-end deferred tax assets and liabilities were due to the following.

	2008			2007
Deferred tax assets
Allowance for loan losses	$	2,695		$	2,097
Deferred compensation		742			673
Intangible assets		1,324			1,416
SOP 03-3 bad debts		1,634			2,401
Pension costs		2,089			—
Other		56			64
Deferred tax asset		8,540			6,651
Deferred tax liabilities
Tax depreciation in excess of book depreciation		(650	)		(825	)
Pension Costs		—			(523	)
Discount accretion on securities		(18	)		(41	)
Purchase accounting adjustments		(3,326	)		(3,774	)
FHLB stock dividends		(2,249	)		(2,090	)
Leases		(52	)		(57	)
Deferred loan fees		(407	)		(429	)
Unrealized gain on securities available for sale		(808	)		(321	)
Other		(35	)		(35	)
Deferred tax liability		(7,545	)		(8,095	)
Net deferred tax asset (liability)	$	995		$	(1,444	)

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2008			2007
Balance at January 1	$	40		$	40
Additions based on tax positions related to current year		123			—
Additions for tax positions of prior years		—			—
Reductions for tax positions of prior years		—			—
Reductions due to statute of limitations		(40	)		—
Settlements		—			—
Balance at December 31	$	123		$	40

Of the 2008 and 2007 totals, $30 and $0 respectively represent amounts that would favorably affect the effective income tax rate in future periods. The Corporation does not expect the amount of unrecognized tax benefit to change significantly in the next year.

(Continued)

55

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 13 — INCOME TAXES (Continued)

The total amount of interest and penalties, net of the related tax benefit, recorded in the income statement for the years ended December 31, 2008 and 2007 was $(2) and $2 respectively, and the amount accrued for interest and penalties at December 31, 2008 and 2007 was $4 and $6.

The Corporation and its subsidiaries are subject to U.S. federal income tax as well as income tax of the state of Ohio for all affiliates other than the Bank. The Bank is subject to tax in Ohio based upon its net worth. The Corporation is no longer subject to examination by taxing authorities for years before 2005.

NOTE 14 — RETIREMENT PLANS

The Corporation sponsors a savings and retirement 401(k) plan, which covers all employees who meet certain eligibility requirements and who choose to participate in the plan. The matching contribution to the 401(k) plan was $161, $108 and $138 in 2008, 2007 and 2006.

The Corporation and its subsidiaries also sponsor a pension plan which is a noncontributory defined benefit retirement plan for all employees who have attained the age of 20¹/2, completed six months of service and work 1,000 or more hours per year. Annual payments, subject to the maximum amount deductible for federal income tax purposes, are made to a pension trust fund. Also, effective January 1, 2007, no new employees will be added to the retirement plan.

The Corporation changed measurement dates for its plan from September 30 to December 31, effective for 2007. The impact of changing the measurement date was not material.

(Continued)

56

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 14 — RETIREMENT PLANS (Continued)

Information about the pension plan is as follows.

	2008			2007
Change in benefit obligation:
Beginning benefit obligation	$	8,966		$	11,003
Service cost		595			539
Interest cost		544			543
Actuarial (gain)/loss		3,490			101
Benefits paid		(754	)		(1,879	)
Plan Amendments		—			(1,990	)
Settlement (gain)/loss		—			405
Measurement Date Change		—			244
Ending benefit obligation		12,841			8,966
Change in plan assets, at fair value:
Beginning plan assets		10,505			7,435
Measurement Date Change		—			192
Actual return		(2,632	)		272
Employer contribution		78			4,511
Benefits paid		(754	)		(1,879	)
Administrative expenses		—			(26	)
Ending plan assets		7,197			10,505
Funded status at end of year	$	(5,644	)	$	1,539

Amounts recognized in accumulated other comprehensive income at December 31, consist of:

	2008		2007
Unrecognized actuarial loss (net of tax, of $2,851 in 2008 and $537 in 2007)	$	5,535	$	1,043

The accumulated benefit obligation for the defined benefit pension plan was $9,594 in 2008 and $8,317 in 2007.

(Continued)

57

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 14 — RETIREMENT PLANS (Continued)

The components of net periodic pension expense were as follows.

	2008			2007			2006
Service cost	$	595		$	539		$	923
Interest cost		543			543			590
Expected return on plan assets		(732	)		(540	)		(471	)
Net amortization and deferral		49			28			127
Measurement date change		—			222			—
Settlement		—			270			—
Net periodic benefit cost		455			1,062			1,169
Net loss (gain) recognized in other comprehensive income		6,805			(1,639	)		—
Prior service cost (credit)		—			—			—
Amortization of prior service cost		—			—			—
Total recognized in other comprehensive income		6,805			(1,639	)		—
Total recognized in net periodic benefit cost and other comprehensive income (before tax)	$	7,260		$	(577	)	$	1,169

The estimated net loss and prior service costs for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $395

The weighted average assumptions used to determine benefit obligations at year-end were as follows.

	2008			2007			2006
Discount rate on benefit obligation		5.43	%		5.51	%		5.51	%
Long-term rate of return on plan assets		7.00	%		7.00	%		7.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

The weighted average assumptions used to determine net periodic pension cost were as follows.

	2008			2007			2006
Discount rate on benefit obligation		5.43	%		5.51	%		5.51	%
Long-term rate of return on plan assets		7.00	%		7.00	%		7.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

The expectation for long-term rate of return on the pension assets and the expected rate of compensation increases are reviewed periodically by management in consultation with outside actuaries and primary investment consultants. Factors considered in setting and adjusting these rates are historic and projected rates of return on the portfolio and historic and estimated rates of increases of compensation.

(Continued)

58

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 14 — RETIREMENT PLANS (Continued)

The Corporation’s pension plan asset allocation at year-end 2008, and 2007, target allocation for 2009, and expected long-term rate of return by asset category are as follows.

				Percentage of Plan
	Target			Assets
	Allocation			at Year-end
Asset Category	2009			2008			2007
Equity securities		20-50	%		47.0	%		55.9	%
Debt securities		30-60			33.0			24.2
Money market funds		20-30			20.0			19.9
Total					100.0	%		100.0	%

The Corporation developed the pension plan investment policies and strategies for plan assets with its pension management firm. The assets are currently invested in six diversified investment funds, which include four equity funds, one money market fund and one bond fund. The long-term guidelines from above were created to maximize the return on portfolio assets while reducing the risk of the portfolio. The management firm may allocate assets among the separate accounts within the established long-term guidelines. Transfers among these accounts will be at the management firms discretion based on their investment outlook and the investment strategies that are outlined at periodic meetings with the Corporation. The expected long-term rate of return on the plan assets is 7.00% in 2008 and 2007. This return is based on the expected return for each of the asset categories, weighted based on the target allocation for each class.

The Corporation expects to contribute $0 to its pension plan in 2009. Employer contributions totaled $78 in 2008, which, along with negative market changes, led to a change in funded status from $1,539 to $(5,644).

Expected benefit payments, which reflect expected future service, are as follows.

2009	$	177
2010		196
2011		270
2012		311
2013		488
2014 through 2018		4,598
Total	$	6,040

(Continued)

59

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 15 — STOCK OPTIONS

Options to buy stock may be granted to directors, officers and employees under the stock option plan, which provides for issue of up to 225,000 options. Exercise price is the market price at date of grant. The maximum option term is ten years, and options vest after three years.

A summary of the activity in the plan is as follows.

	2008					2007
				Weighted				Weighted
				Average				Average
				Exercise				Exercise
	Shares			Price		Shares		Price
Outstanding at beginning of year		39,000		$	25.44		39,000	$	25.44
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(9,500	)		25.54		—		—
Outstanding at end of year		29,500		$	25.42		39,000	$	25.44
Options exercisable at year-end		29,500		$	25.42		39,000	$	25.44

Options outstanding at year-end 2008 were as follows.

	Outstanding
			Weighted
			Average	Weighted
			Remaining	Average
			Contractual	Exercise
Exercise price	Number		Life	Price
$20.50		19,500	3 yrs. 6 mos.	$	20.50
$35.00		10,000	4 yrs. 3.5 mos.		35.00
Outstanding at year-end		29,500	3 yrs. 9 mos.	$	25.42

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common stock as of the reporting date. As of December 31, 2008 and December 31, 2007, the aggregate intrinsic value of the stock options was $0.

(Continued)

60

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 16 — FAIR VALUE MEASUREMENT

FASB Statement No. 157 establishes a fair value hierarchy about the assumptions used to measure fair value. The statement describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Corporation’s own view about the assumptions that market participants would use in pricing an asset.

Securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Impaired loans: The fair value of impaired loans is determined using the fair value of collateral for collateral dependent loans. The Corporation uses appraisals and other available data to estimate the fair value of collateral. (Level 2 inputs).

Assets measured at fair value are summarized below.

Fair Value Measurements at Reporting Date Using:

	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
Available for sale securities	$	—	$	150,936	$	—
Assets measured at fair value on a nonrecurring basis:
Impaired Loans	$	—	$	4,739	$	—

Impaired loans with specific reserves, which are measured for impairment using the fair value of collateral for collateral dependent loans, had a carrying amount of $6,636 with a valuation allowance of $1,897, resulting in an additional provision for loan losses of $417.

(Continued)

61

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 16 — FAIR VALUE MEASUREMENT (Continued)

The carrying amount and estimated fair values of financial instruments not previously presented were as follows.

	December 31, 2008						December 31, 2007
	Carrying			Estimated			Carrying			Estimated
	Amount			Fair Value			Amount			Fair Value
Financial Assets:
Cash and due from financial institutions	$	26,649		$	26,649		$	27,345		$	27,345
Federal funds sold		—			—			18,408			18,408
Loans, net of allowance for loan losses		787,789			803,086			787,386			792,672
Accrued interest receivable		5,764			5,764			7,142			7,142
Financial Liabilities:
Deposits		(809,921	)		(811,125	)		(839,820	)		(838,537	)
Federal Home Loan Bank advances		(69,982	)		(67,429	)		(64,470	)		(69,236	)
U.S. Treasury interest-bearing demand note payable		(3,986	)		(3,986	)		(2,259	)		(2,259	)
Securities sold under agreement to repurchase		(31,143	)		(31,143	)		(27,395	)		(27,395	)
Notes payable		(20,500	)		(20,500	)		(21,500	)		(21,500	)
Subordinated debentures		(29,427	)		(38,588	)		(29,427	)		(29,427	)
Accrued interest payable		(843	)		(843	)		(1,175	)		(1,175	)

The estimated fair value approximates carrying amount for all items except those described below. Estimated fair value for securities is based on quoted market values for the individual securities or for equivalent securities. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the cash flow analysis or underlying collateral values. Fair value of debt is based on current rates for similar financing. The fair value of off-balance-sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements and are considered nominal.

For certain homogeneous categories of loans, such as some residential mortgages, credit card receivables, and other consumer loans, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

NOTE 17 — COMMITMENTS, CONTINGENCIES AND OFF-BALANCE-SHEET RISK

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss

(Continued)

62

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off-balance-sheet risk was as follows at year-end.

	2008				2007
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Commitments to extend credit:
Lines of credit and construction loans	$	6,286	$	97,800	$	9,154	$	101,105
Overdraft protection		—		12,556		—		11,393
Letters of credit		50		1,120		97		1,485
	$	6,336	$	111,476	$	9,251	$	113,983

Commitments to make loans are generally made for a period of one year or less. Fixed-rate loan commitments included above had interest rates ranging from 3.25% to 9.50% at December 31, 2008 and 5.00% to 9.50% at December 31, 2007. Maturities extend up to 30 years.

NOTE 18 — CAPITAL REQUIREMENTS AND RESTRICTION ON RETAINED EARNINGS

The Corporation and Citizens are subject to regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators. Failure to meet capital requirements can initiate regulatory action.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2008 and 2007, the most recent regulatory notifications categorized Citizens as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

(Continued)

63

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 18 — CAPITAL REQUIREMENTS AND RESTRICTION ON RETAINED EARNINGS (Continued)

At December 31, 2008 and 2007, the Corporation’s and Citizens’ actual capital levels and minimum required levels were as follows.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Purposes
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2008
Total Capital to risk- weighted assets
Consolidated	$	87,244		11.3	%	$	61,930		8.0	%		n/a		n/a
Citizens		96,536		12.4			62,281		8.0		$	77,852		10.0	%
Tier I (Core) Capital to risk- weighted assets
Consolidated		61,193		7.9			30,945		4.0			n/a		n/a
Citizens		87,674		11.3			31,035		4.0			46,553		6.0
Tier I (Core) Capital to average assets
Consolidated		61,193		5.8			42,202		4.0			n/a		n/a
Citizens		87,674		8.2			42,768		4.0			53,460		5.0
2007
Total Capital to risk- weighted assets
Consolidated	$	85,113		10.3	%	$	66,107		8.0	%		n/a		n/a
Citizens		94,252		12.5			60,321		8.0		$	75,402		10.0	%
Tier I (Core) Capital to risk- weighted assets
Consolidated		59,945		7.3			32,847		4.0			n/a		n/a
Citizens		75,378		10.0			30,151		4.0			45,227		6.0
Tier I (Core) Capital to average assets
Consolidated		59,945		7.7			31,140		4.0			n/a		n/a
Citizens		75,378		9.9			30,456		4.0			38,070		5.0

The Corporation’s primary source of funds for paying dividends to its shareholders and for operating expenses is dividends received from Citizens. Payment of dividends by Citizens to the Corporation is subject to restrictions by Citizens regulatory agencies. These restrictions generally limit dividends to the current and prior two years retained earnings as defined by the regulations. In addition, dividends may not reduce capital levels below minimum regulatory requirements. At December 31, 2008, Citizens cannot pay any dividends to FCBC without being granted regulatory approval for a dividend.

(Continued)

64

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 19 — PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of FCBC follows.

Condensed Balance Sheets	2008			2007
Assets:
Cash	$	7,052		$	8,588
Securities available for sale		676			481
Loans, net of allowance of $0 in 2008 and 2007		21			1,053
Investment in bank subsidiary		107,739			153,558
Investment in nonbank subsidiaries		12,729			13,530
Other assets		1,303			5,218
Total assets	$	129,520		$	182,428
Liabilities and Shareholders’ Equity:
Deferred income taxes and other liabilities	$	2,976		$	5,345
Subordinated debentures		29,427			29,427
Note payable		20,500			21,500
Common stock		114,365			114,365
Retained earnings (accumulated deficit)		(16,546	)		29,446
Treasury Stock		(17,235	)		(17,235	)
Accumulated other comprehensive loss		(3,967	)		(420	)
Total liabilities and shareholders’ equity	$	129,520		$	182,428

Condensed Statements of Income	2008			2007			2006
Dividends from bank subsidiaries	$	11,576		$	16,285		$	8,310
Dividends from nonbank subsidiaries		620			—			—
Interest income		3			16			291
Other income		70			2			684
Provision for loan losses		(819	)		—			(18	)
Interest expense		(2,695	)		(2,109	)		(2,279	)
Other expense, net		(2,221	)		(2,133	)		(2,367	)
Earnings before equity in undistributed net earnings of subsidiaries		6,534			12,061			4,621
Income tax benefit		1,925			1,425			1,424
(Distributions in excess of earnings of subsidiaries) / equity in undistributed net earnings of subsidiaries		(47,437	)		(6,601	)		115
Net income (loss)	$	(38,978	)	$	6,885		$	6,160

(Continued)

65

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 19 — PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)

Condensed Statements of Cash Flows	2008			2007			2006
Operating activities:
Net income (loss)	$	(38,978	)	$	6,885		$	6,160
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses		—			—			18
Change in other assets and other liabilities		(1,981	)		4			(465	)
Distributions in excess of/(equity in undistributed) net earnings of subsidiaries		47,437			6,601			(115	)
Net cash from operating activities		6,478			13,490			5,598
Investing activities:
Loan originations, net of loan payments		—			—			5,716
Change in loan to nonbank subsidiaries		—			280			5,073
Capital investment in nonbank subsidiary		—			(11,500	)		—
Cash paid for acquisition, net of cash received		—			(16,823	)		—
Net cash from investing activities		—			(28,043	)		10,789
Financing activities:
Net change in note payable		(1,000	)		15,500			(1,000	)
Repayment of long-term note payable		—			(5,155	)		—
Proceeds from subordinated debentures payable to First Citizens Statutory Trust I		—			5,155			—
Cash paid for treasury stock		—			(2,021	)		(7,591	)
Cash dividends paid		(7,014	)		(6,073	)		(6,220	)
Net cash from financing activities		(8,014	)		7,406			(14,811	)
Net change in cash and cash equivalents		(1,536	)		(7,147	)		1,576
Cash and cash equivalents at beginning of year		8,588			15,735			14,159
Cash and cash equivalents at end of year	$	7,052		$	8,588		$	15,735

(Continued)

66

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows.

	2008			2007			2006
Unrealized holding gain (loss) on available for sale securities	$	1,432		$	1,327		$	1,097
Reclassification adjustments for gain (loss) later recognized in income		—			—			—
Net unrealized gain (loss)		1,432			1,327			1,097
Pension liability adjustment		(6,805	)		1,639			398
Tax effect		1,826			(1,008	)		(508	)
Other comprehensive income (loss)	$	(3,547	)	$	1,958		$	987

The following table is a summary of the accumulated other comprehensive income balances, net of tax:

				Current
	Balance at			Period			Balance at
	12/31/07			Change			12/31/08
Unrealized gains (losses) on securities available for sale	$	623		$	945		$	1,568
Unrealized loss on pension benefits		(1,043	)		4,492			(5,535	)
Total	$	(420	)	$	(3,547	)	$	(3,967	)

(Continued)

67

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 21 – EARNINGS PER SHARE

The factors used in the earnings per share computation follow.

	2008			2007		2006
Basic
Net income (loss)	$	(38,978	)	$	6,885	$	6,160
Weighted Average common shares outstanding		7,707,917			5,505,023		5,520,692
Basic earnings (loss) per share	$	(5.06	)	$	1.25	$	1.12
Diluted
Net income (loss)	$	(38,978	)	$	6,885	$	6,160
Weighted average common shares outstanding for basic earnings per common share		7,707,917			5,505,023		5,520,692
Add: dilutive effects of assumed exercise of options		—			—		—
Average shares and dilutive potential common shares outstanding		7,707,917			5,505,023		5,520,692
Diluted earnings (loss) per share	$	(5.06	)	$	1.25	$	1.12

Stock options for 29,500 shares in 2008 and 39,000 shares in 2007 and 2006 were not considered in computing diluted earnings per common share because they were antidilutive.

Basic earnings per common share are calculated by dividing net income by the weighted-average number of common shares outstanding for the period.

Diluted earnings per common share takes into consideration the pro forma dilution of unexercised stock option awards, computed using the treasury stock method.

(Continued)

68

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 22 – QUARTERLY FINANCIAL DATA (UNAUDITED)

					Net			Basic			Diluted
	Interest		Net Interest		Income/			Earnings per			Earnings per
	Income		Income		(Loss)			Common Share			Common Share
2008
First quarter (1)(2)	$	16,266	$	9,642	$	1,312		$	0.17		$	0.17
Second quarter (3)		15,781		10,367		105			0.01			0.01
Third quarter (3)		15,470		10,534		1,230			0.16			0.16
Fourth quarter (4)(5)		14,750		9,944		(41,625	)		(5.06	)		(5.06	)
2007
First quarter	$	11,763	$	7,032	$	1,259		$	0.23		$	0.23
Second quarter (6)(7)		12,338		7,482		1,970			0.36			0.36
Third quarter (8)		12,556		7,225		1,467			0.27			0.27
Fourth quarter (9)(10)		13,289		7,836		2,189			0.38			0.38

(1)	Interest income and net interest income both increased due to merger related volume, partially offset by decreased rates.
(2)	Net income decreased due to a larger provision for loan losses, as well as merger-related noninterest expenses.
(3)	Net income was reduced primarily by a larger provision for loan losses.
(4)	Interest income and net interest income declined due to decreased market rates.
(5)	The fourth quarter net loss is primarily the result of goodwill impairment.
(6)	Net income rose in the second quarter primarily due to the growth of the loan portfolio, and the related interest income related to the loan growth. The increase in net interest income was due to the same.
(7)	Salaries and benefits decreased, primarily due to a reduction in pension expense.
(8)	Net interest income dropped in the third quarter due to increases in funding costs, primarily FHLB advances, but also deposits.
(9)	Both interest income and net interest income rose in the fourth quarter as loan interest increased. Interest on the investment portfolio and federal funds sold increased as well.
(10)	Net income also rose in the fourth quarter due to a decrease in provision for loan loss and an increase in data processing fees.

(Continued)

69

FIRST CITIZENS BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008, 2007 and 2006
(Amounts in thousands, except share data)

NOTE 23 – PARTICIPATION IN THE TREASURY CAPITAL PURCHASE PROGRAM

On October 3, 2008, Congress passed the Emergency Economic Stabilization Act of 2008 (EESA), which provides the U. S. secretary of the Treasury with broad authority to implement certain actions to help restore stability and liquidity to U.S. markets. One of the provisions resulting from the Act is the Treasury Capital Purchase Program (CPP), which provides direct equity investment of perpetual preferred stock by the Treasury in qualified financial institutions. The program is voluntary and requires an institution to comply with a number of restrictions and provisions, including limits on executive compensation, stock redemptions and declaration of dividends. Applications were required by November 14, 2008 and are subject to approval by the Treasury. The CPP provides for a minimum investment of 1 percent of Risk-Weighted Assets, with a maximum investment equal to the lesser of 3 percent of Total Risk-Weighted Assets or $25 billion. The perpetual preferred stock investment will have a dividend rate of 5% per year, until the fifth anniversary of the Treasury investment, and a dividend of 9%, thereafter. The CPP also requires the Treasury to receive a warrant for common stock equal to 15 percent of the capital invested by the Treasury. The Corporation’s application for participation in the CPP was approved. On January 23, 2009, the Corporation received $23,184 in exchange for the issuance of 23,184 shares of preferred stock, $23,184 redemptive value and a warrant to purchase 469,312 shares of common stock at $7.41 per share to the treasury. All of the proceeds received by First Citizens from the sale of the Preferred Shares and warrants will qualify as Tier 1 capital for regulatory purposes.

(Continued)

70

FIRST CITIZENS BANC CORP

Directors

David A. Voight
Chairman of the Board

John O. Bacon
President & CEO Mack Iron Works Company

Laurence A. Bettcher
President, Bettcher Industries, Inc.

Barry W. Boerger
Self-Employed Farmer

Thomas A. Depler
Attorney, Poland, Depler & Shepherd Co., LPA

Blythe A. Friedley
Owner/President, Friedley & Co. Insurance Agency

James D. Heckelman
President, Dan-Mar Co., Inc.

Allen R. Maurice
Attorney, Wagner, Maurice, Davidson & Gilbert Co., LPA

James O. Miller
Chairman, President & CEO,The Citizens Banking Company

W. Patrick Murray
Attorney, Murray & Murray Company, LPA

Allen R. Nickles, CPA, CFE, FCPA
Partner, Payne, Nickles & Co.

John P. Pheiffer
President, Sandusky Bay Development Company
Secretary/Treasurer, Dorr Chevrolet Oldsmobile, Inc.

J. William Springer
President & CEO, Industrial Nut Corporation

Richard A. Weidrick, CPA, PFS
Owner, Weidrick, Livesay, Mitchell & Burge LLC

Daniel J. White
International Business Consultant
President, Norwalk Furniture

J. George Williams
Owner & Secretary/Treasurer,
W & W Farms, Inc. and Thousand Oaks Farms, Inc.

Gerald B. Wurm
President, Wurms Woodworking Co.

Director Emeritus:
George L. Mylander
Retired Educator and City Official
Chair Emeritus, Firelands Regional Medical Center

Officers

James O. Miller, President,
Chief Executive Officer

Richard J. Dutton,
Senior Vice President

James E. McGookey,
Senior Vice President,General Counsel, Corporate Secretary

Todd A. Michel,
Senior Vice President, Controller

Charles C. Riesterer,
Senior Vice President, Lending

Kevin J. Jones,
Auditor

SHAREHOLDER INFORMATION

The Annual Meeting of the Shareholders of First Citizens Banc Corp will be held at Bowling Green State University, Firelands College, Huron, Ohio, on April 21, 2009, at 10:00 a.m. Notice of the meeting and a proxy statement will be sent to shareholders in a separate mailing.

Transfer Agent
Illinois Stock Transfer Company
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606-6905
Tel: (312) 427-2953
or 1-800-757-5755 (Toll Free)
Fax: (312) 427-2879
www.illinoisstocktransfer.com

First Citizens Banc Corp
100 East Water Street
Sandusky, Ohio 44870
Tel: (419) 625-4121
or 1-888-645-4121 (Toll Free)
Fax: (419) 627-3359
www.fcza.com

Citizens Bank Locations Berlin Heights: 24 E. Main St. “ERLIN (EIGHTS #ASTALIA 3ANDUSKY Champaign Bank Locations KRON First citizen Banc Corp

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF REGISTRANT

Subsidiary	Jurisdiction of Organization
The Citizens Banking Company		Ohio
SCC Resources, Inc.		Ohio
First Citizens Insurance Agency, Inc.		Ohio
Water Street Properties, Inc.		Ohio
First Citizens Investments, Inc.		Delaware
First Citizens Capital LLC		Delaware
First Citizens Statutory Trust II		Connecticut
First Citizens Statutory Trust III		Delaware
First Citizens Statutory Trust IV		Delaware
Futura TPF Trust I		Delaware
Futura TPF Trust II		Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-99089 on Form S-8 of First Citizens Banc Corp of our report dated March 4, 2009 on the consolidated financial statements and the effectiveness of internal control over financial reporting, which is incorporated by reference in the Annual Report on Form 10-K of First Citizens Banc Corp for the year ended December 31, 2008.

Crowe Horwath LLP                    

Cleveland, Ohio
March 12, 2009

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

CERTIFICATIONS FOR ANNUAL REPORT ON FORM 10-K

I, James O. Miller, certify that:

1.	I have reviewed this annual report on Form 10-K of First Citizens Banc Corp;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature and Title: /s/ James O. Miller, President, Chief Executive Officer   Date: March 16, 2009 

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

CERTIFICATIONS FOR ANNUAL REPORT ON FORM 10-K

I, Todd A. Michel, certify that:

1.	I have reviewed this annual report on Form 10-K of First Citizens Banc Corp;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature and Title: /s/ Todd A. Michel, Senior Vice President, Controller           Date: March 16, 2009

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of First Citizens Banc Corp (the Corporation) on Form 10-K for the period ending December 31, 2008, as filed with the Securities and Exchange Commission on the date of this certification (the Report), I, James O. Miller, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ James O. Miller

James O. Miller

Chief Executive Officer

March 16, 2009

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of First Citizens Banc Corp (the Corporation) on Form 10-K for the period ending December 31, 2008, as filed with the Securities and Exchange Commission on the date of this certification (the Report), I, Todd A. Michel, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Todd A. Michel

Todd A. Michel

Senior Vice President, Controller

March 16, 2009